Ease of Doing Business for MSMEs: Even as the government had recognised auto dealerships as micro, little and medium enterprises (MSMEs) in the Union Budget 2021-22, a huge quantity of two-wheeler dealers are but to register themselves as MSMEs, according to a survey by credit rating agency Crisil. 67 per cent of two-wheeler dealer respondents weren’t registered as MSMEs in comparison to 63 per cent and 72 per cent of passenger car dealers and industrial car dealers respectively who had been registered as MSMEs.
Moreover, most of the dealers had been not even conscious of the diverse credit schemes offered for MSMEs and had only availed moratorium extension so far. Not just 76 per cent of two-wheeler dealers but 54 per cent of passenger car dealers also didn’t know about schemes that could allow them to access extra credit facilities. The survey noted, “The government’s tweaks in law permitted auto dealerships to register as MSMEs, which would help them get easy access to more credit avenues and various schemes; however, their awareness about the schemes is low.”
“On a regular basis, we engage with dealers on how the MSME registration is done but ultimately the registration has to be done by themselves only. There are a lot of dealers who are new into the segment, many keep entering and exiting the dealership market also and at times it becomes difficult to track them but we keep updating them on the process to be followed for MSME registration and schemes around MSMEs. There are around 30,000 dealerships (across India in the auto retail industry) and it might take some time for many of them to register as MSMEs,” Saharsh Damani, CEO, Federation of Automobile Dealers Associations (FADA) told TheSpuzz Online. FADA is the apex body of the automobile retail business in India engaged in the sale, service, and spares of two and 3-wheelers, passenger automobiles, utility autos, and industrial autos.
While the lack of awareness and reduce registration count is a challenge, importantly, the sales recovery this fiscal year is anticipated to be patchy at 10-15 per cent according to the two-wheelers, passenger autos, and industrial autos dealers, as per the survey of 123 dealers. However, probabilities of a third Covid wave, improve in fuel costs, and provide constraints of original gear companies (OEMs) are most likely to be motives that could slow the sector down.
The volume share of MSME borrowers in the auto and auto elements business, which had close to 1.29 lakh borrowers as of June 2020, stood at 90.55 per cent as of June 2020. Amid Covid, this had improved marginally from 89.51 per cent for the duration of the year-ago period and 88.88 per cent as of June 2018, according to the information from SIDBI and credit bureau CRIF’s report in January this year.