CHENNAI: The inclusion of retail and wholesale traders in micro, small and medium enterprises (MSMEs) has been criticized in the state, with the Tamil Nadu Small and Tiny Industries Association (TANSTIA) urging the government of the Union to reconsider its decision as it will have an impact on financing for MSMEs, which are facing a shortage of liquidity.
TANSTIA, which has a total of 180 MSME associations, including district associations, industrial zones and 1,600 entrepreneurs as direct members and 1.5 lakh as indirect members, said the decision is “damaging, destructive and unsuitable ”for micro-small industries.
TANSTIA President S Anburajan said loans available to MSMEs are insufficient compared to demand. “With the new provision for inclusion of retail and wholesale traders, the funds available would be divided and lead to a contraction in funding for MSMEs. This will further plunge MSMEs into a deep liquidity crisis, ”he added.
This comes after Union Minister Nitin Gadkari announced last Friday the inclusion of retail and wholesale trade in MSMEs, under which they will now also benefit from priority sector loans in accordance with RBI guidelines.
“This new arrangement will reduce the outlook for the manufacturing sector, leading to the closure of micro and small manufacturing units,” Anburajan said. TANSTIA suggested that the retail and wholesale trade be separated and merged with the Ministry of Trade and Industry for specific promotional programs and their implementation.
KV Kanakambaram, president of the Industrial Estate Manufacturers Association, told Express that the Center should allocate segregated funds to retail and wholesale traders and that they should not have a share in the funds allocated to MSMEs. “Already, the sector is in the doldrums,” he added.
What’s going to happen
Inclusion of retail and wholesale trade in MSMEs will enable them to benefit from priority sector loans