Retail and wholesale traders now under the control of MSMEs; experts decode good and bad


The 2020s and 2021s have been unlike any other for India’s micro, small and medium-sized enterprises (MSMEs) sector, which contributes around 30% of the country’s GDP, and is one of the most creative industries in India. jobs, just behind agriculture. In addition, small and medium-sized enterprises contribute around 48% of exports, making them a major source of income for the Indian economy.

This sector has struggled to cope with the slings and arrows of the COVID-19 pandemic, which has caused irreparable damage to several businesses. A recent Dun and Bradstreet Poll indicates that more than 82% of small businesses have been negatively affected by the pandemic and that 70% of them expect it will take almost a year to return to pre-pandemic demand levels.

However, over the past year and a half, the micro, small and medium-sized enterprise sector has also undergone several developments. Last year, as part of the Aatmanirbhar Bharat Recovery Plan, the Indian government has put in place a series of policies to pull the sector out of the ravages of the coronavirus pandemic. Some of the programs that have successfully gained attention include revised definition of MSMEs, unsecured loans of Rs 3 lakh crore, and more.

The most recent program includes the decision to include retailers and wholesalers under the umbrella of MSMEs. A few days before handing over the baton to his successor Narayan tatu rane, former Union Minister for MSMEs Nitin Gadkari made one last attempt to uplift the sector with this move during his tenure. He announced that retailers and wholesalers would now fall under the scope of MSMEs. The Reserve Bank of India (RBI) has also notified the inclusion of retail and wholesale traders in the MSME category.

By discussing with several industry stakeholders, SMBShistory tried to find out what this new announcement means for the industry, and how things will unfold in the coming months.

Why is it a success

The government says this new announcement to group retailers and wholesalers under MSMEs will benefit around 2.5 crore wholesalers and retailers. Naturally, several industry experts welcomed this decision.

Sudhir Jha, vice president of the MPME Development Forum and general secretary of the All India Confederation of Small and Micro Industries (AICOSMIA), thinks it should have happened before, but it is better late than never. He also said, “Retail and wholesale traders are like engines that propel the business ecosystem forward.”

For Kumar Rajagopalan, CEO of the Retailers Association of India (RAI), this is a “historic decision”. He said: “This will give retail MSMEs the support they need to survive, revive and thrive. More importantly, this means that retail and wholesale businesses will be better structured in the days to come, as they need to create a formal method of operation and reporting to use the benefits granted to them. Many retailers who have avoided formal business registration will now be motivated to formalize. “

Several people in the retail community also felt that the move would help them easily access loans, especially since the new notification allows them to register on the Udyam registration portal, which already has more than 30 million people. of registered MSMEs.

(Illustration by Gnana Selvam)

Failures

While it is true that this decision has generated a lot of enthusiasm, a certain part of the population is ambiguous and ambivalent about the impact of this decision on the MSME sector.

One of the wholesalers who did not wish to be named said that the effectiveness of the policy can only be analyzed after some time. According to him “It was too early to comment.

Others have had their share of doubts because they have argued that the government is “Put all the eggs in one basket”.

KE Ranganathan, managing director of Roca Parryware, said he doesn’t see much merit in the recently announced policy. “MSMEs represent the supply side of the ecosystem, while retail and wholesale traders represent the demand side. “

It should be noted that retailers, wholesalers and micro, small and medium enterprises form the business ecosystem. A product – from the stage where it is extracted as a raw material until the moment it becomes a finished product – must pass through the doors of these three segments. Primarily, MSMEs represent the manufacturing stage while the distribution and sale stage is handled by wholesale and retail traders.

According to Ranganathan, the requirements of the three sectors are different and combining them is like combining apples and oranges.

Rangathan says that while everyone is eager to see how this decision plays out in the coming months, separate policies and differentiated focus on sectors are also very important.

Given the impact of the second wave on all sectors, the road to recovery is long and difficult. However, one can only hope that this decision, aimed at relieving crises, goes far and creates tangible value.


About Timothy Cheatham

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