Know all about the application, subsidy, PMEGP interest rate, eligibility and much more.
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.
PMEGP Loan Details |
|
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 |
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 applying for subsidies on the loans taken from 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% |
The loan limit available under the PMEGP scheme is ₹50 Lakhs. In the manufacturing sector, the maximum project cost has been set at ₹50 Lakhs. In the business or service sector, this limit is capped at ₹20 Lakhs. For both, the special and general beneficiary of the scheme is required to contribute 5% and 10% of the amount, respectively. Meanwhile, the bank pays the remaining 95% and 90% of the amount, respectively.
On the other hand, existing manufacturing units can get additional funding of up to ₹1 Crore under this scheme. Similarly, existing service and trading companies are eligible for extra funding of up to ₹25 Lakhs, as per the regulations of PMEGP.
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 the Societies Registration Act of 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.
IDFC First Bank |
Bank of Baroda |
Indian Bank |
Bank of India |
Federal Bank |
Canara Bank |
Punjab National Bank |
Central Bank of India |
IDBI Bank |
HDFC Bank |
UCO Bank |
ICICI Bank Ltd. |
Union Bank of India |
Axis Bank Ltd. |
For the PMEGP scheme list, please visit the official website of PMEGP.
Finally, after checking your eligibility criteria and collecting all the necessary documents, all that remains in the process of getting 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 become 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 in 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
Companies and individuals belonging to the following industries or sectors can apply for 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
The full form of PMEGP is the Prime Minister Employment Generation Programme.
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 as part of the PMEGP scheme.
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% of the project's total cost. Individuals and MSMEs across the country can get the subsidy.
The interest rate applied on the PMEGP loan varies from lender to lender.
As part of PMEGP, the set loan limit is ₹50 Lakhs for a manufacturing unit and ₹20 Lakhs for service/trading units.
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 the Societies Registration Act, 1860, and Production Co-operative Societies.
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 offset against the total PMEGP loan amount and subject to utilisation of funds as per the bank’s requirements.
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.
No, the PMEGP loan scheme allows only one unit per borrower.