What is 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.
PMEGP Latest News Updates
PMEGP Highlights |
|
Interest Rate |
Between 11% and 12% |
Age Criteria |
Must be at least 18 years of age |
Subsidy on Project |
From 15% to 35% |
Repayment Tenure |
3 to 7 years after a preliminary moratorium |
Project Cost |
₹50 Lakhs for Manufacturing Unit & ₹20 Lakhs for Service Unit |
PMEGP News
The PMEGP scheme facilitated the setting up of 1.03 Lakh new manufacturing and services units and created 8.25 Lakh jobs in FY 2022. This was the record high in the last 14 years under the scheme.
More manufacturing units were set up under the PMEGP scheme, up in Jammu & Kashmir than Maharashtra, Gujarat and Karnataka combined.
Objectives of PMEGP Scheme
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.
Subsidy & Funding under PMEGP Scheme
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:
Beneficiary Categories |
Beneficiary’s Share (of Total Project) |
Subsidy Rate (from Govt.) – Urban |
Subsidy Rate (from Govt.) – Rural |
General |
10% |
15% |
25% |
Special |
5% |
25% |
35% |
What is the PMEGP Loan Limit
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.
PMEGP Loan Eligibility Criteria
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
PMEGP Bank List 2023
Below we have tabulated the leading financial institutions that support funding assistance as part of the PMEGP scheme.
IDFC First Bank |
Bank of Baroda |
Indian Bank |
Bank of India |
Kotak Mahindra Bank |
Canara Bank |
Punjab National Bank |
Central Bank of India |
State Bank of India |
HDFC Bank Ltd. |
UCO Bank |
ICICI Bank Ltd. |
Union Bank of India |
Axis Bank |
How to Apply for PMEGP Loan Online
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.
How to Apply for PMEGP Loans (Offline)
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.
Documents Required for PMEGP Loan
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
Which are the Nodal Agencies in PMEGP Implementation
A number of nodal agencies across the country are responsible to ensure the implementation of the PMEGP scheme. These include:
District Industries Centres reporting to the secretaries and commissioners of state government and union territory governments
Coir Board
Financial institutions
Banks
NGOs with at least five years’ experience in project consultancy in technical, social welfare, rural development, small agro and rural industrial development , etc.
Khadi and Village Industries Board or Khadi and Village Industries Commission training centres
National Small Industry corporation offices and training centres and incubation centres under the PPP mode
MSME ministry’s RGUMY-empaneled Udyami Mitras
Khadi and village industries commission field as well as state offices
State village industries boards and Khadi boards
Khadi and Village industries Federation
Department of women and child development
Panchayati Raj institutions
Nehru Yuva Kendra Sangathan
Army Wives Welfare Association of India
Technical or professional colleges recognised by the UGC, government, AICTE with courses in rural polytechnic and ITI
Certified village industries lauded by the Khadi and Village Industries Commission with relevant expertise, manpower and infrastructure.
What Does a PMEGP Loan Offer
Under the PMEGP scheme, the PMEGP loan is a type of term loan offered to entrepreneurs at a specific rate and subsidies on their overall project cost. The exact specifics of a PMEGP loan vary based on a number of factors. Here are some of the more essential details about how much financial assistance a PMEGP loan offers:
Loan Amount: The Government of India offers PMEGP loan amounts based on the sector and the overall project cost. PMEGP Loan amounts are offered up to ₹10 Lakhs for projects in the business or service sectors. For projects in the manufacturing sector, this loan amount is capped at ₹25 Lakhs.
Self Investment: The PMEGP loan scheme also requires a share of self-investment in the project from the entrepreneur. For the General category, this share is marked at 10%, while for the Special category, this share is 5%. Hence, the government can sanction as much as 90 to 95% of your project if it falls within the upper limit.
Subsidy (Rural): Along with the PMEGP loan, the scheme also offers a certain percentage of subsidy or margin money for your project. For rural enterprises, this subsidy percentage is 25% for the General category and 35% for the Special category.
Subsidy (Urban): For urban enterprises, the subsidy percentage is 15% for the General category and 25% for the Special category. Apart from these varying factors, all PMEGP loans incur regular interest rates of around 11-12% per annum. Also, the tenure for repayment of a PMEGP loan can be around 3 to 7 years, with a moratorium period of 6 months. As for collateral, all PMEGP loans up to ₹10 Lakhs do not require any form of security, as per guidelines from the Reserve Bank of India.
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Sectors That Can Avail PMEGP Loan
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
List of Activities Not Allowed under PMEGP
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
Potential Projects Under PMEGP Scheme
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
FAQs on PMEGP Loan
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✔️What is the full form of PMEGP?
The full form of PMEGP is the Prime Minister Employment Generation Programme.
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✔️Is collateral required for a loan under PMEGP?
The collateral requirement under the PMEGP scheme is subjective. There is no collateral required if the project cost is less than ₹10 Lakhs under the PMEGP scheme. CGTMSE provides a collateral guarantee for projects beyond ₹5 Lakhs and up to ₹25 Lakhs as part of the PMEGP scheme.
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✔️What is a PMEGP subsidy?
The PMEGP subsidy is a credit-linked subsidy that the Government of India offers. As part of the subsidy, beneficiaries receive a subsidy of anywhere from 15% to 35% on the project's total cost. Individuals and MSMEs across the country can avail the subsidy.
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✔️What is the PMEGP loan interest rate?
The interest rate applied on the PMEGP loan varies from lender to lender.
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✔️What is the PMEGP loan limit?
As part of PMEGP, the set loan limit is ₹25 Lakhs for a manufacturing unit and ₹10 Lakhs for a service unit.
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✔️Who can apply for a PMEGP loan?
Any person who has passed the VIII standard can apply for loans as part of the PMEGP scheme. Other entities that can apply for a loan under the scheme include Self-help Groups, Charitable Trusts, Societies registered under Societies Registration Act, 1860, and Production Co-operative Societies.
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✔️Is there any lock-in period prescribed for the margin money?
Yes, there is a lock-in period of three years for the margin money or subsidy. This amount is stored in a different savings bank account. This is later on offset against the total PMEGP loan amount and subject to utilisation of funds as per the bank’s requirements.
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✔️How is the expenditure on rent/lease and land for the unit treated as a component of the Project Cost?
The price of rent or lease is treated as a portion of the project cost if it is not older than three years old. The cost of land, however, is not deemed as a component of the project cost.
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✔️How has the scheme fared in the last few years?
According to the PMEGP e portal, this is how the scheme performed over the last few years:
Financial year
Applications Received
Forwarded to banks
Sanctioned by banks
2016-17
405055
149929
37503
2017-18
442007
271782
68663
2018-19
389589
253002
60663
2019-20
102646
26450
5426
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✔️Under the PMEGP loan scheme, is there a provision for borrowers proposing multiple units?
No, the PMEGP loan scheme allows only one unit per borrower.
