Is MSME Applicable for Traders?

Is MSME Applicable for Traders? The Micro, Small, and Medium Enterprises (MSME) industry is referred to as the Indian economy’s backbone, driving manufacturing, services, and now, more and more, trade. Retail and wholesale traders were kept out of the MSME fold for years, denying them important benefits. Recent changes in policy have changed the situation. Let’s dissect Is MSME Applicable for Traders, particularly against the backdrop of recent government notifications, and listen to what industry experts and leaders have to say.

Policy Evolution: Is MSME Applicable for Traders?

Historically, the MSME Development Act, 2006, only provided for manufacturing and service businesses. Retail and wholesale traders-who constitute a crucial portion of the Indian economy-were excluded. This exclusion raised a big point during the COVID-19 crisis, as the traders were finding it difficult to obtain credit and government assistance.

Also Read: how to update udyog aadhar to udyam

Key Policy Change

On July 2021, the Ministry of MSME, on behalf of the Government of India, released a notification (F. No. UAM/MC/01/2021-E-File), formally placing wholesale and retail trade activities under the MSME registration scheme-at least for priority sector lending (PSL) purposes.

Eligible Categories

Wholesale and retail trade and repair of motor vehicles and motorcycles (NIC Code 45)
Wholesale trade except for motor vehicles and motorcycles (NIC Code 46)
Retail trade except motor vehicles and motorcycles (NIC Code 47)

What Do MSME-Registered Traders Really Gain?

Priority Sector Lending (PSL)

This is the most important advantage. Banks are required to lend a portion of their portfolio to priority sectors, such as MSMEs. With MSME registration, traders can:

Get easier and less expensive credit
Get better terms from banks and NBFCs
Enhance their working capital cycles

Restricted Access to Other MSME Schemes

Unlike manufacturing and service MSMEs, businessmen do not receive:

Subsidies under government programs like Credit Linked Capital Subsidy Scheme (CLCSS)
Protection under Section 43B(h) of the Income Tax Act (mandate of timely payment)
Facility of delayed payment interest

Ease of Doing Business

MSME registration can facilitate the procurement of government tenders (where MSME status is preferred)

It may enhance business believability to suppliers and clients

Also Read: how to change bank details in msme

How do Traders become MSMEs?

It’s easy and end-to-end online:

Go to the Udyam Registration Portal
Input Aadhaar, PAN, and GST information
Choose relevant NIC code (45, 46, or 47)
Submit and obtain Udyam Registration Certificate

Also Read: how to check msme registration by gst number

Understanding Is MSME Applicable for Traders? The extension of retail and wholesale traders under the MSME policy is a substantial policy change that indicates the government’s appreciation for the critical function of traders within India’s economic system. While Is MSME Applicable for Traders currently opens up the essential advantage of priority sector lending, it falls short of extending the complete array of incentives and legal safeguards afforded to manufacturing and service businesses.

For businesspeople, understanding Is MSME Applicable for Traders particularly in competitive marketplaces such as Delhi, MSME registration is a savvy move. It can increase access to cheaper credit, make your company more credible, and bring new opportunities knocking. But let’s not go into this step expecting a panacea – the registration is a useful tool in your business toolkit, not a magic wand.