PMEGP
PMEGP: The Prime Minister Employment Generation Programme
Prime Minister’s Employment Generation Programme (PMEGP) aimed at generating employment opportunities in rural and urban parts of the country through the establishment of new self-employment ventures or projects or micro-enterprises. The PMEGP scheme offers a subsidy in the form of a money margin that ranges from 15% to 35% of the project cost, depending on the category and location of the beneficiary. The beneficiary has to contribute 5-10% of the project cost as their contribution and the remaining amount of the project cost is financed by banks. The scheme also offers a 2nd PMEGP loan for expansion or upgradation in the existing activities of well-performing PMEGP or MUDRA units.
PMEGP Scheme Overview
| Criteria | Details |
| Repayment Tenure | 3 years to 7 years |
| Age Criteria | Above 18 years |
| Maximum Project Cost |
|
| Subsidy on Project | From 15% to 35% |
| Lock-in period for claiming Government Subsidy | 3 years after the successful physical verification |
| Applicant’s Education Qualification | At least 8th class pass to set up a project costing over Rs 10 lakh in the manufacturing sector and over Rs 5 lakh in the service/business sector |
Table of Contents
What is PMEGP Scheme
PMEGP is a central government, administered by the Union Ministry of MIcro, Small and Medium Enterprises (MSME). The primary objective of this scheme is to promote self-employment opportunities in the rural and urban areas by providing credit-linked subsidies to new self-employment ventures/micro-enterprises/projects.
The scheme provides financial assistance to those who wish to set up new enterprises under the programme. The nodal agency responsible for the implementation of the scheme at the national level is the Khadi and Village Industries Commission (KVIC).
Aim of the PMEGP Scheme
- Creation of sustainable and continuous self-employment opportunities in both urban and rural areas of the country
- A large segment of unemployed youth of both rural and urban areas are provided with sustainable and continuous employment opportunities. While, traditional and prospective artisans through the establishment of micro-enterprises
- Facilitating the financial institution’s participation for higher credit flow to the micro sector.
PMEGP Interest Rate
The annual interest rates for the PMEGP scheme range from 11% to 12%. However, interest rates may vary across different banks. The Interest Subsidy Eligibility Certificate scheme offers low-interest rates of 4%. The Khadi and Village Industries Commission adjusts the difference between the modified interest rate of 4% and the regular interest rate of 11% to 12%.
What are the Features of the PMEGP Scheme?
PMEGP scheme has following features, which makes it more attractive to build your own business:
- The scheme is implemented through Khadi and Village Industries Commission, State Khadi and Village Industries Commission Directorates, State Khadi and Village Industries Boards and District Industries Centres and banks in urban and rural areas in the ratio of 30:30:40 between Khadi and Village Industries Commission / Khadi and Village Industries Boards / DIC respectively
- Assistance under the PMEGP is only available to new units that are to be established
- There is no income ceiling for setting up projects
- Existing units are ineligible
- Any industry including coir based projects (except for those mentioned in the negative list) can have benefits of this scheme
- The per capita investment under the scheme should not exceed Rs 1 lakh in plain areas and Rs 1.5 lakh in hilly areas
- Maximum project cost Rs 10 lakh in the service sector and Rs 25 lakh in the manufacturing sector is this limit.
- The repayment tenure ranges from 3 to 7 years after an initial moratorium as may be prescribed by the concerned financing bank or financial institution.
- The project cost of up to Rs 10 lakhs is free from collateral security under PMEGP loans.
Benefits of PMEGP loan scheme
Some off the benefits PMEGP are as follows:
- It provides low-interest loans and subsidies to set up new micro-enterprises in the non-farm sector for rural and urban areas.
- It encourages financial institutions to increase credit flow to the micro sector and reduces the dependency on money lenders.
- It creates employment opportunities, especially for traditional artisans and unemployed youth to reduce migration rates from rural to urban areas.
- It gives everyone an equal and fair chance for qualifying for the subsidy as the eligibility criteria are not very intensive.
- It covers most of the industries except a few, which are included in the negative industries list.
Also Read: MSME Advantages and Disadvantages
Subsidy on a PMEGP Scheme
Rate of Subsidy for setting up new enterprise or unit
| Categories of Beneficiaries under PMEGP | Beneficiary’s Contribution (of project cost) | Urban Rate of Subsidy | Rural Rate of Subsidy |
| Area (Location of Project/Unit) | Urban | Rural | |
| General Category | 10% | 15% | 25% |
| Special Category (including ST/SC/OBC/ Minorities/ Ex-servicemen, Physically Handicapped, Aspiration Districts, NER, Women/Transgender, Hill and Border areas, etc.) | 5% | 25% | 35% |
Source: https://dccentral.delhi.gov.in/en/dccentral/pmegp-scheme
| Categories of beneficiaries under PMEGP (for upgradation of existing units) | Beneficiary’s contribution (of project cost) | Rate of Subsidy |
| All categories | 10% | 15% (20% in NER and Hill States) |
Eligibility Criteria for PMEGP Loan
1. PMEGP New Enterprises
- Any individual, above 18 years of age.
- There will be no income ceiling for assistance for setting up projects under PMEGP.
- For setting up a project costing above Rs 10 lakh in the manufacturing sector and above Rs 5 lakh in the service sector, the applicant must have at least 8th standard educational qualification.
- PMEGP loan is offered to new viable micro-enterprises, which includes village industries projects except activities prohibited by local authorities due to environmental or socio-economic factors and those mentioned in the negative list of the guidelines.
- Any existing units (under PMRY, REGP or any other scheme of Central or State Government) and units that have already availed Government Subsidy under any other scheme of Central or State Government are not eligible.
- Projects without Capital Expenditure are not eligible for Financing under the scheme.
- The cost of land is not allowed to be included in the project cost. The cost of a pre-built shed and a long-term lease or rental for a workshop can be included in the project cost, but only for a maximum period of 3 years.
- All implementing agencies (KVIB, DIC, KVIC and Coir Board) can process applications in both rural and urban areas.
- Applicants should have a valid Aadhaar Number.
- Applicant is required to give his/her consent for the authentication of demographic details such as Name, Gender, Aadhaar number, Mobile number and Date of Birth from UIDAI server.
- Only one person from the family is eligible for availing PMEGP loan for setting up projects under the scheme. The ‘family’ includes spouse and self.
2. Upgradation of existing PMEGP/REGP/MUDRA units
- Margin Money or Subsidy claimed under PMEGP has to be successfully adjusted on the completion of lock in period of 3 years.
- First loan under PMEGP/REGP/MUDRA has to be successfully repaid in stipulated time.
- The unit has been profitable for the last 3 years and has the potential for further growth in turnover and profit through the upgradation of the technology.
- UdyogAadhaar Memorandum (UAM) registration is mandatory.
Also Read: MSME New Classification in Detail.
Documents Required for PMEGP Loan
For PMEGP new enterprises
- Project Report Summary
- Passport size photograph
- Highest Educational Qualification
- Rural area certificate (if applicable)
- Special Category Certificate (if applicable)
For existing PMEGP/REGP/MUDRA units
- Previous loan sanction letter issued by the bank.
- Proof of ‘Money Margin claims adjusted against the previous loan’ and ‘Bank Certificate for full loan repayment’.
- Project report for expansion or upgrading the unit.
- Passport size photograph.
- Last 3 years IT returns.
- Last 3 years Annual accounts certified by Chartered Accountant.
How to Apply for PMEGP Loan Online Application
The applicants can apply for a PMEGP loan online by following the steps mentioned below:
Step 1: Visit PMEGP portal https://www.kviconline.gov.in/pmegpeportal/pmegphome/index.jsp
Step 2: Fill the PMEGP loan application form online and save your data. After saving data in the application, the username and password will be sent to the applicant’s registered mobile number. These credentials can be used to track the status of the application.
Step 3: Upload the following documents with a photo, which includes; caste certificate, Special category certificate (wherever required), Project Report, Rural Area certificate or any other applicable document.
Step 4: Submit the application form. A unique Application ID will be generated and sent to the registered Email ID. The application form and documents will be electronically forwarded to the representatives of the preferred IA.
For more details check – https://www.kviconline.gov.in/pmegpeportal/dashboard/helpDeskNo.jsp
Activities not allowed under PMEGP Scheme
- Any business/industry connected with processing/productions/sale of meat or intoxicant items like pan/beedi/cigarette etc. Any Hotel or Dhaba or sales outlet serving liquor, preparation or producing tobacco as raw material, tapping of toddy for sale. However, serving or selling non-veg food at Hotels or Dhabas will be allowed under the scheme.
- Activities prohibited by Local Government/Authorities due to environmental or socioeconomic factors.
- Manufacture of containers of recycled plastic/polythene carry bags of less than 75 microns thickness. The thickness of polythene carry bags shall be governed by the Ministry of Environment, Forest and Climate Change, notification for plastic waste management rules and amendments from time to time.
- Any business/industry linked with sericulture, cultivation, floriculture, horticulture. However, value addition under these categories will be allowed for availing loan under the scheme.
EDP Training
Entrepreneurship Development Programme (EDP) training is mandatory for claiming margin money through PMEGP e-portal. Projects which cost above Rs 5 lakhs, the beneficiary has to undergo EDP training for 10 working days and 5 working days for projects costing up to Rs 5 lakhs. Projects which cost up to Rs 2 lakhs, do not require any compulsory training.
The training will involve interacting with successful rural entrepreneurs, banks and field visits. KVIC has developed an online module to offer free 2-day EDP training to prospective entrepreneurs.
The applicants who have already taken the training of a minimum of 60 hours (for online mode) and a minimum of 10 days (for offline mode) under Entrepreneurship cum Skill Development Programme (ESDP) or Skill Development Programme (SDP) or Vocational Training (VT) are not required to undergo EDP training again.
Apply for PMEGP(MSME Business Loan) through OneNDF
You can take advantage of the PMEGP scheme by availing business loans by applying through OneNDF, which connects businesses and individuals with the perfect lenders to meet their specific needs. Using advanced algorithms, we match you with the best loan terms, ensuring a fast, simple, and personalised experience from start to finish. Apply today to start your business journey.
FAQs
PMEGP Stands for Prime Minister’s Employment Generation Programme.
Project can be financed by the Bank in the form of a composite loan consisting of Capital Expenditure and Working Capital. Maximum cost under PMEGP is Rs 50 lakh, which includes Term Loan for Capital Expenditure and Working Capital.
Broadly individuals aged 18 years and above seeking to set up new units in the manufacturing and trading sector are eligible to apply for PMEGP loans. Additionally, the applicants should be at least 8th standard pass for setting up new projects over Rs 5 lakh in the service/business sector or Rs 10 lakh in the manufacturing sector.
The interest rate set for borrowers availing PMEGP subsidy will depend on the financing bank as per their credit policies.
All public sector banks, Regional Rural Banks (RRB), SIDBI, co-operative banks and private scheduled commercial banks regulated by RBI and approved by SLMC of the concerned states.
The maximum project cost allowed under the PMEGP scheme is Rs 50 lakhs for the manufacturing unit and Rs 20 lakhs for the service unit.
The Ministry of MSME has not specified any timeframe for the disbursement of the PMEGP loan from the financing bank. In case of delay in the sanctioning of a loan by banks, applicants can file a complaint on the PMEGP grievance portal. This complaint will be communicated to the concerned nodal officer within 2 working days.
PMEGP subsidy is offered in the form of margin money subsidy ranging between 15% to 35% on the project cost, depending on the category and location of the beneficiary. The subsidy is offered after 3 years on the successful completion of physical verification.
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