Inclusion of Urban Street Vendors in the MSME Category

Ministry of Micro, Small, and Medium Enterprise (MSME) has announced a revised definition for MSMEs with the Inclusion of urban street vendors in the MSME category. With the revised guidelines, the street vendors will now be allowed to register on Udyam Registration Portal. The existing definition of MSMEs includes manufacturing and service enterprises, whereas street vendors were not classified under the same. Under the revised guidelines, street vendors will also benefit from priority sector lending under the Reserve Bank of India (RBI) guidelines.

Synopsis of Notification

The Ministry of Micro, Small & Medium Enterprises (MSME), on August 9, 2021, notified the Inclusion of urban street vendors in the MSME category.

Ministry has clarified that the Street Vendors can register as retail trades on Udyam Registration (UR) portal.
The registration process does not differentiate between urban and rural enterprises.
The benefits to Retail and Wholesale trade MSMEs are restricted to Priority Sector Lending only.

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Udyam Registration for Street Vendors

Ministry of Micro, Small, and Medium Enterprises has decided to include Street Vendors trade as MSMEs for the limited purpose of Priority Sector Lending, and they would be allowed to be registered on Udyam Registration Portal for the following NIC Codes and activities mentioned against them:

NIC Codes	Retail and Wholesale Trade
45	Wholesale and retail trade and repair of motor vehicles and motorcycles
46	Wholesale trade except for motor vehicles and motorcycles
47	Retail trade except for motor vehicles and motorcycles

The Enterprises having Udyog Aadhaar Memorandum (UAM) under the above three NIC Codes are now allowed to migrate to Udyam Registration Portal or file Udyam Registration afresh.

Eligible Entity for MSME Registration

Every business entity includes one-person company, proprietorship, partnership firm, manufacturer, producer, limited company, private limited company, limited liability partnership firm, co-operative societies, any association of individuals, retailers, Hindu Undivided Family, or any other undertaking should get Udyog Aadhar Registration. With Revised Guidelines for MSME, street vendors will be allowed to register on Udyam Registration Portal.

Priority Sector Lending Benefit for Street Vendors

Street Vendors have been facing a severe liquidity crunch after the Covid-19 lockdowns hit sales. Considering this, MSME has issued the order to include retail and wholesale trade as MSME, extending to them the benefit of priority sector lending under RBI guidelines.

Other Benefits to Street Vendors

The benefit of adding Street Vendors in the MSME category is as follows:

The revised definition of MSME will help Street Vendors Trade by giving better finance options for businesses that want to get structured.
It will give retail MSMEs the support they need to survive, revive and thrive.
The Covid pandemic-affected Street Vendors will now be able to restore their businesses by obtaining finances from banks, which was earlier denied to them.
Besides tax concessions, Udyam registered entities also have access to cheaper credit and ease in getting various business-related approvals.
Street Vendors are now eligible to get loans from banks and financial institutions.
Street Vendors will now be eligible for several government schemes.

Note: On June 28, the Finance Ministry increased the emergency credit line guarantee scheme (ECLGS) to Rs.4.5-lakh crore, mainly for the MSME sector Know more about the Emergency Credit Line Guarantee Scheme – ECLGS 4.0

Criteria for Classification of MSME

An enterprise shall be classified as a micro, small or medium enterprise based on the following criteria.

A micro-enterprise, where the investment in plant and machinery or equipment does not exceed one crore rupees and turnover does not exceed five crore rupees.
A small enterprise, where the investment in plant and machinery or equipment does not exceed ten crore rupees and turnover does not exceed fifty crore rupees.
A medium enterprise, where the investment in plant and machinery or equipment does not exceed fifty crore rupees and turnover does not exceed two hundred and fifty crore rupees.

Procedure to Register Street Vendors as MSME

Any person intending to establish a micro, small or medium enterprise (MSME) must file Udyam Registration online in the Udyam Registration portal, based on self-declaration with no requirement to upload documents, papers, certificates, or proof.

On registration, an enterprise will be assigned a permanent identity number (Udyam Registration Number)
An e-certificate, namely, the “Udyam Registration Certificate,” shall be issued on completion of the registration process.
The form for registration shall be as provided in the Udyam Registration portal.
There will be no fee for filing Udyam Registration.
An Aadhaar number shall be required for Udyam Registration.

Other Conditions

If an enterprise is duly registered as an Udyam with PAN, any deficiency of information for previous years when it did not have PAN shall be filled up on a self-declaration basis.
No enterprise shall file more than one Udyam Registration: Provided any number of activities, including manufacturing or service, may be specified or added in one Udyam Registration.
Whoever intentionally misrepresents or attempts to suppress the self-declared facts and figures appearing in the Udyam Registration or update process shall be liable to such penalty as specified under section 27 of the Act.

Click here to learn more about the MSME – Udyam Registration.