Prime Minister's Employment Generation Programme (PMEGP)

What is PMEGP?

Prime Minister's Employment Generation Programme (PMEGP) is a credit-linked subsidy scheme of the Ministry of Micro, Small and Medium Enterprises that helps individuals set up new micro enterprises in manufacturing and in the service and business sector. PMEGP does not lend money itself. A bank sanctions the loan; the government then releases a margin money subsidy which is kept in a term deposit receipt in the beneficiary's name and adjusted against the loan after the lock-in period and successful EDP training.

According to the Ministry of MSME, PMEGP provides a margin money subsidy ranging from 15% to 35% of the admissible project cost, depending on the applicant's category and whether the unit is in a rural or an urban area.

PMEGP is administered by the Khadi and Village Industries Commission (KVIC) as the national nodal agency, with implementation on the ground through state KVIBs, District Industries Centres and banks.

Key objectives

• Generate self-employment opportunities in rural and urban areas through new micro enterprises.
• Give traditional artisans and unemployed youth a route into enterprise rather than wage work.
• Slow rural-to-urban migration by creating enterprise employment where people already live.
• Raise the earning capacity of artisans and contribute to rural and urban employment growth.

Main features

• Margin money subsidy of 15% to 35% of project cost for new units.
• Project ceiling of Rs 50 lakh in manufacturing and Rs 20 lakh in business and service.
• Beneficiary contribution of 10% for general category and 5% for special category.
• No income ceiling for eligibility.
• Second loan for upgradation of an existing PMEGP unit, with ceilings of Rs 1 crore in manufacturing and Rs 25 lakh in business and service.
• Mandatory Entrepreneurship Development Programme (EDP) training before subsidy release.
• Fully online application on the PMEGP e-Portal at kviconline.gov.in.

How much subsidy does PMEGP give?

For a new micro enterprise:

Special category covers SC, ST, OBC, minorities, women, ex-servicemen, transgender persons, differently-abled persons, and applicants from the North Eastern Region, aspirational districts, hill and border areas.

For an upgradation (second) loan to an existing PMEGP unit, all categories contribute 10% and receive 15% subsidy, or 20% in the North Eastern Region and hill states.

In rupee terms, the numbers that matter:

• A rural special-category applicant with a Rs 50 lakh manufacturing project can receive up to Rs 17.5 lakh in margin money subsidy.
• An urban general-category applicant with a Rs 20 lakh service project receives up to Rs 3 lakh.
• A second loan for manufacturing upgradation carries a maximum subsidy of Rs 15 lakh, rising to Rs 20 lakh in NER and hill states; for business and service, the caps are Rs 3.75 lakh and Rs 5 lakh.

If your project cost exceeds the ceiling, the bank may still fund the balance, but without any government subsidy on the excess.

Who is eligible for PMEGP?

You can apply if:

• You are an individual above 18 years of age.
• You are setting up a new micro enterprise: PMEGP funds new projects only.
• Your project involves capital expenditure, since a term loan component is required.
• Your activity is not on the scheme's negative list.
• You are a Self Help Group, including one whose members are below the poverty line, that has not availed benefits under any other scheme.
• You are an institution registered under the Societies Registration Act, 1860, a production cooperative society, or a charitable trust.

Educational qualification: a Class VIII pass certificate is required only for projects costing above Rs 10 lakh in manufacturing or above Rs 5 lakh in service and business. Below those thresholds there is no education requirement, and there is no income ceiling at any project size.

You cannot apply if:

• You run an existing unit. PMEGP assistance is available only for new viable projects sanctioned specifically under PMEGP. The exception is the separate second-loan window for upgrading an existing PMEGP unit.
• You have already availed a government subsidy under PMRY, REGP, PMEGP, CMEGP or any other scheme of the central or a state government.
• Your project has no capital expenditure, a pure working-capital or trading proposal is not eligible.
• Your activity falls in the negative list published in the PMEGP guidelines.

What documents are required for PMEGP?

How to apply for PMEGP online

1. Go to the PMEGP e-Portal at kviconline.gov.in and open the Application for New Unit form under the individual applicant section.
2. Register with your Aadhaar number, name, state, district, mobile number and email, and verify the OTP.
3. Fill the application; agency you want to apply through (KVIC, state KVIB or DIC), activity type, whether the unit is rural or urban, your category, project cost and the bank branch you want.
4. Upload the documents — Aadhaar, PAN, project report, photograph, and any caste, rural-area or education certificate you are relying on.
5. Submit the application and note the application ID, then save the final PDF of the application.
6. The implementing agency screens the application and, if selected, calls you for interview before the District Level Task Force Committee.
7. On the committee's recommendation, the application moves to the bank for appraisal and sanction of the term loan and working capital.
8. Complete EDP training: required before the margin money subsidy is released, and then the subsidy is credited as a term deposit receipt in your name with the bank.

How to apply for PMEGP through an agency office

1. Visit your District Industries Centre, the state Khadi and Village Industries Board office, or the KVIC district office.
2. Ask for help filing the online application on kviconline.gov.in. The application itself is online in every case.
3. Submit the project report and supporting documents to the agency.
4. Attend the District Level Task Force Committee interview when called.

What happens after the bank sanctions your PMEGP loan?

The margin money subsidy is not paid to you in cash. The bank claims it from KVIC and holds it as a term deposit receipt in your name for a lock-in period. During that lock-in you must:

• Complete EDP training if you are not exempt.
• Keep the unit operating, since the subsidy is adjusted only against a functioning enterprise.
• Service the bank loan as scheduled.

At the end of the lock-in, and subject to satisfactory operation of the unit, the subsidy is adjusted against the loan account, permanently reducing your outstanding. If the unit is closed or the loan misused during the lock-in, the subsidy is refunded to KVIC and never becomes yours.

Common reasons PMEGP applications are rejected

• Existing unit disguised as a new one, the most common ground for rejection at scrutiny.
• Prior government subsidy under PMRY, REGP, PMEGP or a state scheme.
• Project with no capital expenditure, or a proposal that is essentially trading.
• Activity on the negative list of the PMEGP guidelines.
• Weak project report: no realistic cost break-up, no employment projection, and no credible market assessment, which fails at bank appraisal even after the task force clears it.
• Missing Class VIII certificate on a project above the Rs 10 lakh or Rs 5 lakh threshold.
• Category or rural-area claim not backed by a certificate, which reduces your subsidy to the general or urban rate.

Help and grievance redressal for PMEGP

• PMEGP toll-free helpline: 1800-180-6763, available 10:00 AM to 6:00 PM
• State-wise helpdesk numbers and email IDs are published on the PMEGP e-Portal helpdesk page at kviconline.gov.in
• District Industries Centre and state KVIB office for application status and task force scheduling
• Ministry of MSME website, msme.gov.in, for the current scheme guidelines and eligibility criteria

Applying on the PMEGP e-Portal is free. No consultant can guarantee a sanction: selection is decided by the District Level Task Force Committee and the loan by the bank's own appraisal of your project report.