PMEGP Scheme
Prime Minister's Employment Generation Programme
A flagship credit-linked subsidy program aimed at generating self-employment opportunities through the establishment of micro-enterprises in both rural and urban areas.
The Prime Minister's Employment Generation Programme (PMEGP) is a credit-linked subsidy scheme launched by the Ministry of MSME, Government of India, to generate employment opportunities in rural as well as urban areas through setting up of self-employment ventures.
It is a 'One-Stop' solution for unemployed youth and traditional artisans to become entrepreneurs. The scheme is implemented by Khadi and Village Industries Commission (KVIC) as the nodal agency at the national level.
At the state level, the scheme is implemented through State KVIC Directorates, State Khadi and Village Industries Boards (KVIBs), District Industries Centres (DICs), and Banks.
“Turning job seekers into job providers through sustainable micro-enterprises.”
Nature of the Scheme
Under the PMEGP, a beneficiary has to invest only 5% to 10% of the project cost as their own contribution. The government provides a 'Margin Money' subsidy ranging from 15% to 35% of the project cost.
The balance (60% to 75%) of the project cost is provided by banks as a term loan. It covers all viable new projects in the manufacturing and service sectors, excluding those specifically mentioned in the negative list (like meat, intoxicants, etc.).
Who is Eligible for the PMEGP Scheme?
Who can apply for PMEGP assistance?
Individuals
Any individual above 18 years of age. No income ceiling.
Educational Qualification
At least VIII standard pass for projects above ₹10 Lakh in manufacturing and ₹5 Lakh in service sector.
Self Help Groups
SHGs (including those belonging to BPL provided they have not availed benefit under any other scheme).
Institutional Bodies
Institutions registered under Societies Registration Act, 1860, Production Co-operative Societies, and Charitable Trusts.
ℹ️ Eligibility Checklist:
- •Only for NEW units/projects. Existing units are not eligible.
- •The unit should be established at a new location.
- •Applicants should not have availed any government subsidy under other schemes for the same unit.
What Types of Projects are Covered?
Sectors encouraged under PMEGP:
Manufacturing
Food processing, agro-based industries, engineering, textiles, and chemicals.
Services
Repairing workshops, dry cleaning, salons, tailoring, and tourism-related services.
Trading
Retail shops and trading activities (Recently expanded coverage).
Key Benefits
Rural Subsidy
35%
For Special Categories (SC/ST/OBC/Minority/Women/Ex-Servicemen) in rural areas.
Urban Subsidy
25%
For Special Categories in urban areas or General Category in rural areas.
General Urban
15%
For General Category applicants setting up units in urban areas.
Lending Institutions
Various financial institutions provide loans under this scheme:
- ✓All Public Sector Banks
- ✓Regional Rural Banks (RRBs)
- ✓Co-operative Banks approved by State Level Task Force Committee
- ✓Private Sector Scheduled Commercial Banks
How to Apply? (Step-by-Step)
Online Registration
Fill the application on the PMEGP e-Portal (KVIC) and upload a passport-size photo and project summary.
DPR Submission
Upload the Detailed Project Report (DPR) along with Aadhaar, education, and caste certificates.
Scrutiny
KVIC/DIC will scrutinize the application and forward it to the selected bank.
Bank Appraisal
The bank evaluates the feasibility and sanctions the loan (90-95% of project cost).
EDP Training
Mandatory 10-day Entrepreneurship Development Programme (EDP) training before first disbursement.
ℹ️ Approval Timeline: Typically 30 to 45 days from application to sanction.
Documents Required
Note: The DPR is the most critical document. It must show financial viability and employment potential.
Common Mistakes Applicants Make
⚠️ Inaccurate DPR
Providing unrealistic financial projections or non-viable business models.
⚠️ Location Mismatch
Failing to provide a proper Rural Area Certificate for rural-specific higher subsidies.
Frequently Asked Questions
Can I buy land with PMEGP loan?
No, the cost of land cannot be included in the project cost under PMEGP.
Is collateral required?
Loans up to ₹10 Lakh are usually collateral-free under RBI guidelines. Higher amounts may be covered under CGTMSE.
Conclusion
PMEGP is a robust gateway for first-time entrepreneurs to start their journey with significant government backing.
Our team assists in the entire lifecycle—from selecting the right project category and preparing a bankable DPR to navigating the EDP training and securing the margin money subsidy.
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