A Direly Needed Step: Yasmin Kapoor on the MSME Classification for the Retail Sector

Yasmin Kapoor throws light on the eligibility of the retail sector for Udyam Registration and its benefits.

In July 2021, the Government of India announced revisions in the definition of MSMEs (Micro, Small & Medium Enterprises) which, in effect, meant the inclusion of retail and wholesale trades under MSMEs. The revised guidelines also enabled these sectors to be eligible for Udyam Registration, which is required to avail benefits of schemes from Ministry of MSME.

Hailing the new rules as a timely intervention from the government, Yasmin Kapoor, Director of IDFS Tradings, described the addition of retail sector under MSMEs, “the retail sector suffered a -79% growth in monthly sales due to the COVID-19 pandemic. It is in dire need of support and boost from all the stakeholders.”

With the tag of an MSME, retailers can now register themselves on the Udyam Registration portal, which replaced the Udyog Aadhar Memorandum (UAM). It is a free self-declaration platform for small enterprises to be registered and linked with their PAN and GST details. According to the MSME Ministry, 35.8 lakh MSMEs have been registered on the Udyam portal till July, 2021.

Yasmin Kapoor underscored the importance of including the retail sector under the ambit of these relief measures will immensely bolster them and empower them to get the business units back on track. She expressed, “Previously, retailers could not access the required finances since they were devoid of the MSME tag under Udyam portal.”

“However, this recognition will impact millions of people who are associated with the sector and in turn, stimulate the economy as a whole. The RBI has already notified banks, NBFCs, and other financial institutions to assist and facilitate the retail sector with credit flow to MSMEs and consider them for limited purpose of Priority Sector Lending”, she commented.

To stimulate the economy which faced the onslaught of the pandemic, the government had extended various credit and financing schemes, many of which are aimed at MSMEs particularly. Yasmin Kapoor underlined the benefits which the Udyam Registration will accord to retail sector as well.

“With the Udyam portal, a consolidated data record is created for enterprises. They no longer need to manually register for different activities and can utilize their unique registration to access the benefits of COVID-19 recovery package from Ministry of MSME”, she stated.

Further, she said, “The major impact of this decision is structural as it will help the sector to be formalized and gain access to institutional finance options. For instance, they are eligible for the Emergency Credit Line Guarantee Scheme (ECLGS) as well as the Subordinate Debt allocated for MSMEs worth Rs. 20,000 crore.”

In lieu of the economic strain due to the pandemic, the relief package for MSMEs also provides for concessional loan rate by banks, concessions in electricity bills, exemption in certain direct and indirect tax laws, and reduced compliance burden with the new limit for tax audits raised from Rs. 5 crores to Rs. 10 crores. All these advantages extended to the MSMEs for economic relief are now available to the retail sector through registration on the Udyam portal.

Expressing hope for the road ahead for India’s MSME retailers, Yasmin Kapoor said, “The Indian Retail B2B (Business-to-business) market stood at $714 billion dollar in FY19. Despite the slump over the next year, it is set to grow at a CAGR of 10% and become worth $1.3 trillion by FY25, according to an analysis by RedSeer.”


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