PMEGP Scheme

PMEGP stands for the Prime Minister’s Employment Generation Programme, which is a credit-linked subsidy programme offered by the Government of India. It was first launched in 2008. The PMEGP came about to merge two previous similar government schemes that shared similar goals and benefits - the Prime Minister’s Rozgar Yojana and the Rural Employment Generation Programme. The prime objective of these two programs and the PMEGP scheme is to provide much-needed financial encouragement to Indian entrepreneurs in rural and urban sectors to set up their businesses and enterprises.

As a result of these initiatives, the program strives to foster employment among the country’s youth and aid the community with new ventures. The administration of the PMEGP is handled by the Ministry of Micro Small and Medium Enterprises, while the Khadi and Village Industries Commission governs the implementation on the national level. On the district level, the scheme is handled by District Industries Centres and banks.

Here’s the snapshot covering the PMEGP loan details.

Below are  the key objectives of the PMEGP loan:

• Generating employment opportunities in India's rural and urban areas by setting up various new projects, micro-enterprises, and ventures.

• Providing a common structure and source of self-employment opportunities for artisans and sections of unemployed youth spread across the country.

• To eliminate the need for rural people to migrate and seek employment opportunities in urban areas by providing them with stable modes of employment within their region. This goes a long way in aiding traditional artisans and sections of unemployed youth who only manage to secure seasonal employment in a year.

• To help boost artisans' income-earning opportunities and capacity and increase the employment rate in rural and urban areas.

The PMEGP scheme allows beneficiaries to pay a minimum portion of the cost of the project while availing subsidies on the PMEGP loan taken from the banks that have been linked to the scheme. The subsidy under this scheme is known as margin money, and it is decided based on the category and geographical area where the applicant is based. Here are the subsidy rates that can be accessed under the PMEGP scheme:

The loan limit available under the PMEGP scheme is between ₹9.5 Lakhs to ₹23.75 Lakhs. In the manufacturing sector, the maximum project cost has been set at ₹25 Lakhs. In the business or service sector, this limit is capped at ₹10 Lakhs. For both, the beneficiary of the scheme is required to contribute 5% to 10% of the amount while the bank pays the remaining 90 to 95%.

In practice, however, the subsidy amount received from the government is 15% to 30% of the loan amount. This is called the margin money. The bank ends up paying 60 to 75% of the total project cost in the form of a term loan.

The PMEGP scheme strives to make a substantial improvement in the employment and entrepreneurship landscape of the country. It follows that the PMEGP loans have specific criteria for budding entrepreneurs or businesses that may be eligible for this beneficial opportunity. Here is a comprehensive list of individual and organisation criteria that determine the eligibility of the PMEGP loan scheme.

• If the beneficiary is an individual, he or she must be above 18 years of age.

• For individuals seeking a PMEGP loan for a project cost above ₹ 10 Lakhs within the manufacturing sector, he or she must have studied and passed at least Class 8. The same loan criteria apply for project costs above ₹ 5 Lakhs within the business or service sector.

• Self-help groups are also eligible for PMEGP loans. This is, however, contingent on the condition that the group has not availed any benefits under any other scheme.

• Societies registered under Societies Registration Act, 1860 are eligible for PMEGP loans.

• Co-operative Societies involved in production businesses.

• Charitable Trusts

Below we have tabulated the leading financial institutions that support funding assistance as part of the PMEGP scheme.

Finally, on checking your eligibility criteria and collecting all the necessary documents, all that remains in the process of availing the PMEGP loan is the application process. Here are the simple steps you need to follow while making a PMEGP online application:

• Start by logging on to the official E-portal page of the PMEGP scheme on the KVIC website online.

• Click on the applicable option available on the page - individual or non-individual - and you will be directed to an online application form.

• Fill out the relevant details on the form.

• When completed, click the ‘Save Applicant Data’ button at the bottom of the page.

• The last step will require you to upload the necessary documents and submit the application.

• You will receive all application related details on the contact details you provide. The applicable PMEGP loan for you will subsequently be processed.

Those seeking to becomes beneficiaries of subsidies under the PMEGP scheme can apply through the offline mode using the following steps: 

• Download the PMEGP scheme application form by visiting https://mpmsme.gov.in:8080/mpmsmecms/Uploaded%20Document/Documents/1_Application_Form_PMEGP.pdf

• Fill all the necessary details.

• Submit the print out of the form at the nearest network bank.

• The bank will require you to complete some formalities.

• A bank representative will get in touch with you upon the approval or rejection of your application.

After ascertaining whether an individual or organisation meets the eligibility criteria listed above, they can move on to the next step - collecting the necessary documents for the PMEGP loan application process. Here is a comprehensive list of the documents you will require before applying for a PMEGP loan scheme:

• Application form with passport-sized photographs

• Identity & Address Proofs

• PAN card, Aadhaar card & VIII Pass certificate

• Project Report

• Special category certificate, if required

• Certificate of Entrepreneur Development Programme (EDP)

• Caste Certificate for SC/ST/OBC/Minority/Ex-Servicemen/PHC

• Certificate of academic and technical courses, if any

• Any other documents required by the bank or NBFC

The following industries or sectors can avail of a loan under the PMEGP scheme:

• Service and textile

• Handmade fibre and paper

• Mineral based products

• Agro based food processing

• Forest based products

• Rural engineering

• Rural biotech

• Polymer based products

• Chemical based products

The activities not allowed under the PMEGP scheme include the following businesses:

• Manufacturing or sale of items like beedis, cigars and cigarettes

• Tapping of toddy for sale

• Cultivation of crops

• Floriculture, sericulture or horticulture 

• Manufacture of polythene bags thinner than 20 microns

• Manufacture of containers made from plastic

• Canning, processing or serving of meat

• Hotel, shop or dhaba that serves alcohol

• Production or preparation of tobacco as raw materials

• Rubber, coffee or tea plantations 

• Animal husbandry like pisciculture or poultry

Here are the potential projects for which funding can be received under the PMEGP scheme:

• Cement and allied products

• Cold storage

• Cold chain solutions

• Electronics and electrical equipment

• Forest industry

• Paper and allied products

• Service sector

• Textile and apparel

• Agro based food processing

• Chemical, polymers and minerals

• Dairy and milk products

• Food processing

• Horticulture

• Organic farming

• Plastic and allied services

• Small business models

• Waste management

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