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Govt urged to include traders in definition of MSME Development Act

Traders have urged the Union government to include traders’ too, right from the definition of enterprise of ‘enterprises’ under the Micro, Small and Medium Enterprises Development Act (MSMEDA) through an amendment. “Only then traders can enjoy the security as well as benefits enjoyed by micro and small enterprises,” president of the Agrofood Chamber of Commerce and Industry S Rethinavelu said.
According to the chamber, only manufacturers, producers and service providers are under the definition of ‘enterprise’ in the MSME Development Act, 2006. Denial of such benefit to the traders is very much detrimental to their growth, Rethinavelu said and added that most of the traders in agro food products are in the micro and small sector and there is no enactment to promote and protect retail and wholesale traders.

This is despite the number of such establishments in the organized and the unorganized sector being estimated at over 7 crore and several crore people dependent on it for their livelihood. But their welfare is neglected in spite of repeated representations over the years. The chamber expressed disappointment over the neglect of traders in this regard in the recent classification of MSME.
They recalled that recently the Union government included retail and wholesale traders under the MSME classification. It was widely appreciated by trade bodies, but before going into the details of the same. “But later we came to know this is only to make them eligible for priority sector advances by banks and financial institutions,” the chamber president said.

This is with the objective of helping Urban Co-operative Banks (UCBs) achieve the Priority Sector lending (PSL) target of 75 percent of its net credit by 2024. “It is however a solace for traders to come out of the liquidity crunch as an aftermath of the Covid lockdown,” he added. One of the key benefits that traders would enjoy if brought under the definition of ‘enterprise’ is under the Micro and Small Enterprises Facilitation Council (MSEFC).
The MSMED Act states that a buyer from micro and small enterprises should pay the invoice amount within 45 days, failing which they have to pay with compound interest that is thrice the rate offered by banks. Since a legal course is time consuming, the enterprise can approach the MSEFC, an alternate dispute resolution forum, for speedy settlement, Rethinavelu who was a member of the council for five years said.
The award is passed by the council in 90 days. 75% of the award has to be remitted before moving an application to set aside any award. In Tamil Nadu these forums are functioning in Chennai, Coimbatore, Madurai and Trichy. The chamber has written to the Prime Minister and the MSME minister Narayan Tatu Rane to enable traders to enjoy all the benefits under the MSME category.