TRADERS AND WHOLESALE TRADERS PART OF MSME NOW

MSME is the backbone of the Indian economy. For a country to grow, the
government should actively promote business enterprises. Among business
enterprises, the Micro, Small and Medium Enterprises (MSME) deserve special
attention. Micro, small and medium Enterprises (MSMEs) are the growth
accelerators of the Indian economy, contributing about 30% of the country’s
gross domestic product (GDP). In terms of exports, they are an integral part of
the supply chain and contribute about 40% of the overall exports. Interestingly,
MSMEs form a huge part of the rural economy as well, as more than half of the
MSMEs operate in rural India. To ensure that MSMEs continue to lead the
country towards economic growth, the Government of India has from time to
time announced various schemes to support the development of this sector.

One such recent development has brought cheer to all the entrepreneurs
engaged in trading and wholesale trading business in India. Accepting a long-
standing demand, the Central Government has now included retail and
wholesale traders under the MSME (micro, small and medium enterprises)
classification under the revised guidelines. This would benefit 8-10 crore retail
and wholesale traders all over India. There could not be better time for this
news for all the traders and wholesale traders as they have been facing severe
liquidity crunch after sales were hit by the Covid-induced local lockdowns since
the past 1.5 year.

These MSMEs would be called as UDYAM and they will now be able to
register on the Udyam Registration Portal and will be allotted their permanent
identity number to be known as “Udyam Registration Number”. The
Government will also not charge any registration fees from the MSMEs for their
registration on the Udyam Registration Portal
Who is eligible for registration :

As per the new definition, various traders and whole sale traders will now be
classified as below

Classification Investment Limit Turnover Limit

Micro Less than INR 1 Crore Less than INR 5 Crore

Small INR 1 to 10 Crore INR 1 to 25 Crore

Medium INR 10 to 50 Crore INR 25 to 250 Crore

As a step towards ease of doing business in India, the government has decided
that the export turnover will not be considered in the aforesaid turnover limits
prescribed for MSME units.
‘Investment in plant and machinery’ would be calculated as per provisions
under the Income-tax laws and the ‘Turnover’ would be considered as per the
GST return. If an enterprise, which is classified in a particular category crosses
the specified limits for either investment or turnover, it will be placed in the
next higher category. On the other hand, an enterprise shall be placed in the
lower category only if both investment and turnover fall below the ceiling
specified for the relevant category.

Benefit of UDYAM registration to MSMEs

1.Payment within 45 days to MSME

One of the biggest benefit of registration as an MSME unit is that in case
of an MSME enitiy, the payment for invoices is assured within 45 days
 under the MSME Act. In case the payment is not made to the MSME
within 45 days, the buyer is liable to pay compound interest with monthly
rests to the MSME on the invoice amount at three times the bank rate
notified by the Reserve Bank of India.
2. Priority Lending schemes
Access to credit has been one of the foremost concerns for the MSMEs.
An emergency credit line to businesses/MSMEs, wherein loans up to 3
Lakh Crore is sanctioned by banks/financial institutions in the country.
Under this scheme, 20% of the outstanding loan will be guaranteed by the
government, and banks will be able to lend without additional guarantees.
The last date for this scheme is extended till 30-09-2021
3.Subordinate Debt Scheme
As the ongoing pandemic has added to the financial strain faced by the
MSMEs, promoters are unable to bring in equity funding. In order to
assist the promoters, the subordinate debt scheme seeks to extend support
to the promoters by providing a debt facility of up to 15% of the promoter
contribution or `75 lakh, whichever is lower. Under this scheme, banks
will be able to fund the promoter’s contribution and the funding gets
guaranteed by the government. The promoter, in turn, will infuse the
amount in the MSME unit as equity and thereby enhance the liquidity and
maintain debt-equity ratio.
4.Mandatory procurement from MSMEs
Government departments and public sector companies are mandated to
procure 25% of their requirement from MSMEs; therefore, the
registration gives them an edge while submitting tenders in such cases.

5. Bank Loans (Collateral Free)

The Government of India has made collateral-free credit available to all

MSME. This initiative guarantees funds to micro and small sector
enterprises.A trust named The Credit Guarantee Trust Fund Scheme was
introduced by the Government Of India, SIDBI (Small Industries
Development Bank Of India) and the Ministry of Micro, Small and
Medium Enterprise to make sure this scheme is implemented (Credit
Guarantee Scheme) for all Micro and Small Enterprises.
6. Overdraft Interest Rate Exemption

Businesses and enterprises registered as MSMEs can avail a benefit of

1% on the Overdraft in various schemes offered by bank. This helps
making small business and MSMEs secure cheap finance during
unfavourable markets.

7. Industrial Promotion Subsidy Eligibility

Businesses that have been registered as MSMEs are eligible for subsidies
for Industrial Promotion as provided by the Government. We are hopeful
that now that government will launch new schemes which will benefit the
retail and wholesale traders

8. Reducation on Electricity Bills

All companies that have the MSME Registration Certificate are entitled
to concessions on their electric bill. This enables businesses reduce costs
like electricity and maintenance. micro, small and medium enterprises
can avail of the concession by providing an application to the department
of electricity along with the certificate of registration.

9.  ISO Certification Charges Reimbursement

Any registered micro, small and medium enterprise can claim

reimbursement of the expenses that were made in order to obtain an ISO
certification. This motivates entrepreneurs to get their respective
businesses ISO certified which helps them to do business abroad in terms
of high-quality exports.

10. Subsidy on Patent Registration

Under the current laws MSMEs registered with the MSME ministry stand
to benefit a 50% subsidy on their patent registration fees. This encourages
small businesses and firms to keep innovating and working on new
projects and technologies. The subsidy can be availed by submitting an
application at the respective ministries.
11. Market Development Assistance Scheme for MSME
Under this scheme, The Central Government follows a Price and
Purchase Preference policy Wherein around 358 items are listed for
exclusive purchases by Central Government from the MSME units only.
They will be provided support in form of marketing assistance even for
those products, which are sold by MSMEs and do not fall under the
purview of Reservation Policy.

12. Special consideration on international trade fairs:

Under the International Cooperation Scheme, financial assistance Is
provided on reimbursement basis to the State/Central Government
organizations, industries/enterprises Associations and registered
societies/trusts and organizations associated with MSME for deputation
of MSME business delegation to other countries. This assistance is
provided for exploring new areas of participation by Indian MSMEs in
international exhibitions, trade fairs, buyer seller meet and for holding
international conference and seminars which will benefit the MSME.

Conclusion

MSME’s are the future of the country and are rapidly growing with
regular support from the government and the inclusion of traders and
whole sale traders into the ambit of MSME will give a much needed
boost to the economy. The youth of our country who are inspired to start
their own venture have a wonderful platform to fullfil their
entrepreneurial ambitions and giving much needed boost to the spirit of
atmanirbhar bharat.