The trading sector: case for inclusion under MSME

Imagine this – the supermarket you regularly go to for buying processed food, toiletries, stationery, cosmetics and grocery suddenly decides to shut shop (that includes online sellers too!). Instead, now you must directly contact the manufacturer of each item you need to buy. Oh, what an ordeal it would be!

That is perhaps precisely how the government imagines our economy looks like since when it framed the MSME law back in 2006. It is only the manufacturing and service units that are eligible to apply for MSME registration and benefits.

Now that numerous incentives have been announced for MSMEs, this bias against the trading community has become even more glaring.

The manufacturing sector, which has been so dear to the policy makers since forever, is hugely dependent on the wholesalers and retailers for distribution. Yet somehow, it is the same traders that have been conveniently excluded from the very definition of MSME.

And it is pertinent to mention here that almost all retailers in the country are small dealers – whether selling online or in the traditional brick and mortar model; and have huge working capital requirements to stay in business. They have been generating employment intensively – both organised and unorganised.

In the broad sector-wise distribution of GDP – you will never see how much this sector contributes individually, as trade forms part of the larger ‘services sector’. Yet, while ‘services’ are included for benefits under MSME Scheme, trading sector is bereft of same.

There seems to be no justifiable reason for excluding the trading units from MSME benefits. In a recent meeting, Mr. Nitin Gadkari, the Minister of MSME, assured the trading community that their demand for inclusion under the MSME sector will be looked into. However, it’s been almost a month since, and traders are yet to get the good news.

In a recent meeting, Mr. Nitin Gadkari, the Minister of MSME, assured the trading community that their demand for inclusion under the MSME sector will be looked into.

This may motivate the traders to disguise as manufacturers or service providers by doing just enough to sneak into the definition by circumventing the law. What this may indeed ultimately lead to is a not-so-reliable data of the manufacturing activity in the country, especially by MSMEs; in addition to the added litigation of what exactly constitutes ‘manufacturing’ or ‘provision of service’.

Now, when the government has been underpinning ‘Aatmanirbhar Bharat’ to meet its dual objectives of reviving domestic economy as well as dealing with foreign aggression, it becomes all the more important to give this sector its due.

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