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Govt brings retail, wholesale trade under MSME


NEW DELHI: Four years after excluding it from the micro, small and medium enterprises segment, the government on Friday reinstated retail and wholesale trade in the category, making entities eligible for priority sector funding and special liquidity scheme from banks.
The move, which MSME minister Nitin Gadkari said would benefit 2.5 crore enterprises, came after months of inter-ministerial wrangling, which saw several wings of the government pass the buck on one another, and even the Reserve Bank of India refused to play ball until the government reworked its rules.
In fact, at one point in time, agencies within the government had argued that retail and wholesale trade were not “services”, although they were categorised within that bracket globally as well as in India.
This was despite the government including retail and wholesale trade enterprises in the MSME Development Act, 2006, until it was dropped on the recommendations of a committee in 2017.
The problem came to light after the government reworked the turnover limit last year and a new electronic registration process was started using GST and permanent account numbers. While retailers and wholesale traders who had registered up to 2017 were eligible under the earlier system, the new system would have blocked them out.
Describing the Centre’s move as “path breaking”, industry bodies on Friday said the decision will help in the formalisation of the sector.
Apart from access to priority sector loans from banks, retail and wholesale trade enterprises can take advantage of other schemes for MSMEs.
Under the new rules, commercial banks have to extend 40% of the adjusted non-bank credit or credit equivalent amount of off-balance sheet exposure (whichever is higher) to agriculture, MSMEs and weaker sections. Of the total, 7.5% has to go to small businesses.


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