India’s youth are at the heart of the nation’s growth story. However, limited access to funds stands in the way of turning their ideas into reality. To bridge this gap, the Government of India launched the Prime Minister Employment Generation Programme (PMEGP).

The key objective of the scheme is to provide financial assistance, subsidies and training to start new businesses. In this blog, we will understand the PMEGP eligibility, the subsidies it offers, and how to apply for it.

What is PMEGP (Prime Minister Employment Generation Programme)?

The Prime Minister Employment Generation Programme (PMEGP) is a credit-based subsidy programme launched by the Government of India to promote entrepreneurship and employment generation, particularly in rural and semi-urban regions. Khadi and Village Industries Commission (KVIC) manages the scheme nationally. The State Khadi and Village Industries Boards (KVIBs) and District Industries Centres (DICs) manage the scheme at the state and district levels.

Since its inception, PMEGP has assisted over 10 lakh microbusinesses by disbursing business loans of over ₹73,348.39 crore, of which ₹27,166.07 crore is in the form of KVIC subsidy. Under the scheme, qualified applicants can establish new manufacturing or service facilities with a subsidy of between 15 and 35%, depending on the category of the applicant and the location (urban or rural).

Key Features of PMEGP

• Loan Type: Credit-linked subsidy on establishment of new units only (not expansion or modernisation).
• Beneficiaries: Self-help groups, charitable trusts, cooperative societies, and individuals over the age of 18 years.
• Project Cost Limit: The project cost limits for the PMEGP scheme are as follows:
  • ₹50 lakh for the manufacturing unit
  • ₹20 lakh for the service unit
• Subsidy Scale: 15-35% of the cost of the project, depending on category and area.
• Funding Pattern: Here is how the funding quotient works under PMEGP:
  • Own Contribution: 5-10% by the beneficiary
  • Bank Finance: 90-95% of the project cost
  • Government Subsidy: Applied to the loan account of the beneficiary

PMEGP Subsidy Structure

The PMEGP subsidy aims to offer financial assistance in the form of a margin money subsidy, which decreases the burden of repayment for the borrower and makes it easier to start a new business. Here is the subsidy that eligible entities can get:

PMEGP Subsidy Rates (According to Category and Area)
	Beneficiary’s Contribution	Rate of Subsidy
Area		Urban	Rural
General Category	10%	15%	25%
Special Category (SC/ST/OBC/Women/Ex-Servicemen/Physically Handicapped, etc.)	5%	25%	35%

The KVIC subsidy is not provided to the applicant directly, but the financing bank stores it in a Term Deposit Receipt (TDR) for over 3 years. It is modified against the loan upon successful verification of the unit operation.

Benefits of the PMEGP Subsidy

• Reduces the financial burden on new entrepreneurs.
• Promotes the establishment of businesses in rural and semi-urban regions.
• Encourages equal involvement of women, SC/ST and other underrepresented groups.
• Serves as an intermediary between self-employment and formal credit systems.

PMEGP Eligibility Criteria You Must Meet

Here is the PMEGP eligibility criteria you must meet in order to enjoy the benefits of the scheme:

• Age: The applicant should be aged 18 years and above.
• Educational Qualification: The applicant should have passed at least the 8th standard for projects costing above ₹10 lakh for manufacturing businesses and ₹5 lakh for services.
• Entities Eligible: Here are the eligible entities that can apply for the PMEGP subsidy:
  • Individual entrepreneurs
  • Self-Help Groups (SHGs)
  • Charitable trusts
  • Registered societies
  • Cooperative societies
• Project Eligibility: The loan should be used to start a new unit only. Existing businesses are not eligible under PMEGP.
• Project Cost Limits: Eligible project cost limits are:
  • ₹50 lakh for the manufacturing unit
  • ₹20 lakh for the service unit
• A Detailed Project Report (DPR) should support the project and show potential to generate viable income.
• Beneficiary Contribution: General category applicants must cover 10% of the cost of the project. Special Category applicants (SC/ST/OBC/Women/Ex-Servicemen/Physically Handicapped, etc.) must cover 5% of the project cost.
• Exclusions: The applicants who have already availed government subsidy under other schemes like PMRY, REGP or any other central/state subsidy-linked scheme are not eligible.

Step-by-step Guide for How to Apply for PMEGP Online

Here are the steps you must follow to apply for PMEGP online:

1. Visit the PMEGP e-portal: Visit the KVIC PMEGP e-Portal and click on ‘Application For New Unit’.
2. Fill in Details: Fill in the online form with personal, business and project information such as Aadhaar, name, location, address, project cost, business activity and the preferred financing bank.
3. Upload Documents: Upload necessary documents like Aadhaar card, PAN card, educational certificate, detailed project report, and photograph.
4. Submit the Application: Check all the information and send the application. An Application ID will be created with a unique ID to be tracked in the future.
5. Verification and Forwarding: District Industries Centre (DIC) or KVIC/KVIB office verifies the details and forwards the application to the chosen bank.
6. Bank Sanction and Subsidy Approval: After the loan is approved, the bank takes the margin money subsidy (15-35%) of KVIC, which is disbursed after verification of the project.

The KVIC PMEGP e-Portal allows entrepreneurs to track their business loan applications online. Applicants can see real-time updates by entering the Application ID or PMEGP ID.

Understanding PMEGP EDP Training

Once the PMEGP loan has been approved, the beneficiaries are required to go through a brief Entrepreneurship Development Programme (EDP). The subsidy is approved only after completing the EDP training.

Entrepreneurship Development Programme (EDP)

• The EDP training is normally 10 days and is carried out by well-known institutions like KVIC, KVIB, DICs or other government-approved training centres.
• The training includes important subjects as business planning, accounting, marketing, production management, and regulatory compliance.
• The margin money subsidy cannot be released without the successful completion of the training.

PMEGP Second Loan & Upgradation Scheme

Entrepreneurs who have already started successful businesses under the scheme can apply for the PMEGP Second Loan for upgradation. You can use the funds to expand or modernise your businesses, embrace new technologies, and generate more job opportunities.

PMEGP Second Loan Eligibility

• Existing PMEGP units that have been in operation and performing well.
• Purpose of the Loan: Expansion, modernisation or diversification of the operations of the current unit.
• Project Cost Limit: ₹1 crore for upgrading.
• Subsidy Assistance: The General Category can avail a subsidy of 15%. Special category (SC/ST/OBC/Women/Ex-Servicemen/Physically Handicapped and NER category) can avail a subsidy of 20%.
• Own Contribution: The beneficiary must contribute 10% of the project cost.

Documents Required for PMEGP Scheme

The following are the documents that you must upload and submit to apply for a PMEGP loan using the KVIC portal:

• Aadhaar Card and PAN Card
• Passport-size photograph
• Education qualification certificate (8th pass, as applicable)
• Caste or community certificate (to SC/ST/OBC/Minority/Women applicants)
• Physically handicapped certificate (where applicable)
• Detailed Project Report (DPR) including cost breakdown and income projection
• Bank account information and a passbook copy.
• Quotation of machinery/equipment to be bought.
• Rent contract or ownership documents of the business premises proposed.
• EDP certificate (in case already done) of training.
• Consent letter of the co-applicant or partner (in the case of group applications)

The PMEGP scheme fills the gap between ambition and opportunity by providing subsidised financial assistance and entrepreneurship training. This financial support helps you transform your ideas into sustainable businesses and generate employment for others.

While the PMEGP subsidy offers a great start, business loans by DMI Finance help you grow your business. Apply for a collateral-free business loan of up to ₹25 lakh for all your expansion, upgradation and working capital needs.

Frequently Asked Questions (FAQs)

1. What is the PMEGP scheme?

The Prime Minister Employment Generation Programme (PMEGP) is a government-supported credit-based subsidy programme that offers financial support to individuals and small businesses to start new manufacturing or service units.

2. Who implements the PMEGP scheme?

PMEGP is implemented by the Khadi and Village Industries Commission (KVIC) under the Ministry of MSME, as well as KVIBs and District Industries Centres (DICs) at the state and district levels.

3. Who can apply for the PMEGP loan?

Any Indian citizen who is 18 years old and above can apply. The candidate should have completed at least 8th standard in projects of more than ₹10 lakh (manufacturing) or ₹5 lakh (services).

4. Are there any existing businesses that can apply to PMEGP?

No. PMEGP loans are only offered to new business units. Businesses or units that have already availed a government subsidy through other schemes are not eligible.

5. What is the maximum loan I can get under PMEGP?

The project cost that can be availed is ₹50 lakh on manufacturing units and ₹25 lakh on service units.

6. How much subsidy does PMEGP offer?

You can get a KVIC subsidy of between 15% and 35% of the project cost, depending on the category of the applicant and the location of the unit, rural or urban.

7. What is EDP training, and is it compulsory?

It is a 10-day training program on basic business management and operational skills. It is compulsory prior to the release of the subsidy.

8. Which kinds of businesses can be covered by PMEGP?

PMEGP assists only new manufacturing and service businesses.

9. How much time does it take for a PMEGP loan?

The loan approval process is usually 60-90 days, which is dependent on the completeness of the documents, project viability and the processing time of the bank.

10. Do higher-value projects need collateral security?

Loans up to ₹10 lakh under CGTMSE do not require collateral. In the case of larger sums, banks can demand collateral according to their own lending standards.