Minister of MSME, Nitin Gadkari in a tweet announced the inclusion of retail and wholesale trades as MSMEs.
Retailer and whole seller kept out of MSME for the last 4 years as the main objective for MSMEs was to promote manufacturing industry by giving loan to their business. This required a large amount of investment for setting up manufacturing plants and generating employments. MSMEs are considered as the backbone of the Indian economy they contribute and generate large number of employment.
Under the revised guidelines, the Ministry of MSME has issued an order to include retail and wholesale trade as MSME and extending to them the benefit of priority sector lending,” he said, adding that this would benefit 2.5 crore retail and wholesale traders, and they will now be able to register on the Udyam Registration Portal.
What benefits will the retail and wholesale traders get as MSMEs?
In the difficult time of pandemic COVID19 Government have taken various initiatives get access to funds and tide over the impact. The wholesale and retail traders will therefore now be eligible to avail those schemes and gain from the benefits attached to them.
Another key benefit which the traders can now avail is that of priority sector lending (PSL). Loans given to the MSME sector come under priority sector lending.
The loans given to MSME sector also come under the ambit of PSL and as per the RBI’s guidelines, commercial banks should extend 40 percent of the total lending towards the priority sector while for the regional rural banks and small finance banks, the PSL target has been set at 75 percent of the total lending.
Also another benefit which the traders can reap is of the Udyam registration portal. The Udyam portal is a free, paperless online and instant registration portal.
MSMEs which self certify their existence by registering on the government portal are eligible for a wide variety of benefits ranging from interest rate subsidy on bank loans, to exemption under direct tax laws, concession in electricity bills among others.
Other existing benefits that now will be eligible are
- Collateral Free Bank Loans
- Overdraft interest rate exemption
- Protection over delayed payment from buyer
- Subsidy on patents registrations
- Concession on electricity bill
- ISO Certification charges are reimbursed
- Direct tax benefits
MSMEs are growing rapidly with the support of Government. It is the best initiative to boost entrepreneurial spirit of MSME founders as the advantages so with the ease of registration process to many more upcoming perks, it is one of the best options available for Micro, Small and Medium enterprises, as it provides many direct and indirect benefits.
However many industrialist are also having risk that now banks will focus more on retailer and whole seller as their is low risk involved as compared to manufacturing companies which will impact existing MEMEs Industry.
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