The government last week revised guidelines for MSMEs with inclusion of retail and wholesale trades as MSME units. The move is expected to benefit 2.5 crore retail and wholesale traders as they --under the revised guidelines --will now get more benefits. Retailers and wholesalers were classified as MSMEs in the past, but were excluded in 2017, and now their inclusion has warmly been welcomed by the retailers and wholesalers.
Retailers and wholesalers in the country have been suffering a lot for quite some time now due to the pandemic and subsequent restrictions, and now their inclusion into the MSME sector is expected to give a much-needed relief to the sector. It will help the traders to avail requisite finances from banks and at the same time make the best of the plethora of schemes which are presently for MSMEs. No doubt, this sounds good, but there is a flip-side to it, however.
While the government's intention is commendable, it is equally true that inclusion of 2.5 crore traders as MSMEs would dilute the sector which is already under pressure. The MSME schemes will be open now for retailers and wholesalers, and banks too are likely to prefer retailers and wholesalers – as they are less risky in business-- over manufacturers. Simply speaking, MSMEs, including manufacturers and exporters in the sector, will suffer as a result of sharing their exclusive benefits with 2.5 crore traders now included as MSMEs.