Prime Minister's Employment Generation Programme (PMEGP)

Prime Minister's Employment Generation Programme (PMEGP) is a credit-linked subsidy scheme of the Ministry of Micro, Small and Medium Enterprises implemented nationally through the Khadi and Village Industries Commission (KVIC), along with KVIBs, District Industries Centres (DICs), Coir Board and participating banks. The scheme aims to create sustainable self-employment by supporting new micro-enterprises in rural and urban areas.

The scheme is primarily intended for new micro-enterprises in the non-farm sector. Existing PMEGP, REGP or MUDRA units can also receive second-loan support for upgradation subject to separate eligibility and performance conditions.

Margin Money Subsidy for New Units:

• General Category beneficiaries contribute 10% of project cost.
• General Category subsidy is 15% in urban areas and 25% in rural areas.
• Special Category beneficiaries contribute 5% of project cost.
• Special Category subsidy is 25% in urban areas and 35% in rural areas.
• Special Category includes SC, ST, OBC, Minorities, Women, Ex-Servicemen, Transgenders, Persons with Disabilities, NER, Aspirational Districts, Hill and Border areas, and other categories covered by the applicable guidelines.

Maximum Project Cost for New Units:

• Manufacturing-sector projects are eligible for margin money subsidy on project cost up to ₹50 lakh.
• Business/Service-sector projects are eligible for margin money subsidy on project cost up to ₹20 lakh.
• Any project cost above the applicable ceiling may be financed by the bank without Government subsidy on the excess amount.
• The balance amount of the eligible project cost, after the beneficiary's own contribution and margin money subsidy structure, is provided through bank finance.

For example, a Special Category beneficiary establishing a manufacturing project with eligible project cost of ₹50 lakh in a rural area may receive margin money subsidy at 35%, subject to scheme conditions and admissibility. The maximum subsidy in this example would be ₹17.50 lakh.

Eligibility for New Units:

• Any individual above 18 years of age can apply.
• There is no income ceiling for assistance under PMEGP.
• For projects costing above ₹10 lakh in manufacturing or above ₹5 lakh in business/service, the beneficiary should have at least VIII standard pass educational qualification.
• Assistance is available only for new projects sanctioned specifically under PMEGP.
• Existing units that have already received Government subsidy under PMRY, REGP or another Central or State Government scheme are not eligible for a new-unit PMEGP subsidy.
• Only one person from one family can obtain financial assistance for setting up a PMEGP project. Family includes self and spouse.

Second Loan for Existing Units:

• Existing well-performing PMEGP/REGP/MUDRA units can be considered for a second loan for upgradation and expansion.
• The beneficiary contribution is 10% of project cost.
• Margin money subsidy is 15%, or 20% in NER and Hill States.
• For manufacturing upgradation, the maximum project cost admissible for margin money subsidy is ₹1 crore and the maximum subsidy is ₹15 lakh, or ₹20 lakh for NER and Hill States.
• For business/service upgradation, the maximum project cost admissible for margin money subsidy is ₹25 lakh and the maximum subsidy is ₹3.75 lakh, or ₹5 lakh for NER and Hill States.
• The existing unit's previous margin money subsidy must have been successfully adjusted after the prescribed 3-year lock-in period.
• The first loan under PMEGP, REGP or MUDRA must have been successfully repaid within the stipulated period.
• The existing unit should be profit-making, have good turnover and demonstrate potential for further growth through modernization or technology upgradation.

Eligible Activities:

PMEGP covers viable new micro-enterprises in the non-farm sector, including eligible manufacturing, service and permitted business activities.

Trading activities are subject to specific restrictions. Business or trading sales outlets may be permitted in specified areas such as NER, LWE-affected districts and Andaman & Nicobar Islands. Retail outlets selling Khadi products, Village Industry products procured from KVIC-certified institutions, products manufactured by PMEGP units and SFURTI clusters may be permitted across the country. Retail outlets backed by manufacturing or service facilities may also be permitted subject to the applicable conditions.

Important Exclusions and Negative List:

• Existing units that are ineligible for new-unit assistance or have already received Government subsidy for the same purpose cannot claim another PMEGP subsidy.
• Only one person per family is eligible for financial assistance for setting up a PMEGP project.
• Activities connected with slaughtered meat processing, canning or food service are not permitted.
• Production or sale of intoxicating items such as Beedi, Pan, Cigar and Cigarette, liquor-serving hotels or dhabas, tobacco processing and toddy tapping for sale are not permitted.
• Cultivation of crops or plantations such as Tea, Coffee and Rubber, cocoon rearing, horticulture, floriculture and animal husbandry are not permitted as such primary activities. However, permitted value-addition and certain farm-linked or off-farm activities may be eligible.
• Activities prohibited by local Government or other competent authorities for environmental or socio-economic reasons are not permitted.
• Projects without eligible capital expenditure are not eligible.
• Cost of land cannot be included in project cost. Ready-built sheds and eligible long-term lease or rental work-shed/workshop costs may be included subject to the prescribed maximum 3-year limitation.

Application Process:

• Visit the official PMEGP portal.
• For a new unit, select the Application for New Unit option.
• Fill in the online application form and save the applicant data.
• Upload the required documents and submit the application.
• Existing eligible units applying for second-loan assistance should select Application for Existing Units (2nd Loan).
• Complete the relevant online application and upload the required documents.
• Keep the generated application/reference details safely for future tracking.
• The application is examined by the implementing agency and processed through the prescribed PMEGP approval and banking procedure.
• The bank appraises the project, repayment capacity and other applicable credit requirements before sanction.
• Margin money subsidy is released through the prescribed banking mechanism and remains subject to the applicable 3-year lock-in period before final adjustment.

The current PMEGP portal states that all new PMEGP units must be registered on the Udyam Registration Portal before physical verification and adjustment of margin money in the beneficiary loan account.

Documents Required:

• Caste Certificate, where applicable.
• Special Category Certificate, wherever required.
• Rural Area Certificate, wherever applicable.
• Project Report.
• Education / EDP / Skill Development Training Certificate, where applicable.
• Other applicable supporting documents required by the implementing agency or bank.

Additional documents may be requested by the financing bank depending on the nature, size and structure of the proposed enterprise.

Current Scheme Position:

PMEGP continues to be a major Government credit-linked employment-generation programme. Current Government information confirms the ₹50 lakh manufacturing and ₹20 lakh service/business project ceilings and margin money subsidy of up to 35% for eligible beneficiary/location combinations.

Applicants should use the current PMEGP portal and applicable KVIC/Ministry guidelines because project eligibility, negative-list conditions, documentation and banking requirements can be updated.