The Prime Minister’s Employment Generation Programme (PMEGP) is an initiative introduced by the Ministry of MSME to foster employment opportunities in both rural and urban regions. Through the PMEGP scheme, the Government provides credit-linked subsidies of up to 35% of the total project cost, supporting entrepreneurs in establishing their ventures. Service units can avail coverage for projects up to Rs. 20 lakh, while manufacturing units can receive assistance for projects up to Rs. 50 lakh.
PMEGP – Highlights – 2023
| Interest Rate on Loan | Around 11-12% – May vary from lender to lender (Lender includes All Public Sector Banks ,Regional Rural Banks(RRB), Co-operative Banks,SIDBI and Private Scheduled Commercial Banks regulated by RBI ) |
| Age Requirement | Minimum 18 years or above |
| Maximum Project Cost | Rs.50.00 lakhs for manufacturing unit |
| Rs.20.00 lakhs for Service Unit. | |
| Subsidy on Total Project Cost | Maximum Subsidy allowed From 15% to 35% |
| Eligible Entities | Individual Entrepreneurs Only. |
| Applicant’s Education Qualification | At least Class 8th pass or further as per discretion of PMEGP |
| Whether Collateral Security is mandatory? | As per RBI guidelines the project costing upto Rs.10.00 lakhs under PMEGP loans are free from collateral security. The CGTMSE provided collateral guarantee for the project upto Rs. 2.00 Crore. |
Under the auspices of the Indian Government, PMEGP collaborates with banks to provide financial assistance for establishing new ventures. Recently, the Government made noteworthy enhancements to the existing scheme, raising the maximum project cost from Rs. 10 lakh to Rs. 20 lakh for service units and from Rs. 25 lakhs to Rs. 50 lakhs for manufacturing units.
Business owners participating in this scheme need only invest 5% to 10% of the project cost, while the Government extends a subsidy ranging from 15% to 35% based on specific criteria. The banks extend funds in the form of Term Loans, Working Capital Loans (Cash Credit), and Composite Loans.
For General Category beneficiaries, the bank sanctions 90% of the project cost, while for Special Category beneficiaries, it sanctions 95%. However, the credit from the bank constitutes approximately 60% to 75% of the total project cost, with the remaining 15% to 35% being offered as a margin money subsidy under the PMEGP scheme.
The loan facilities are available in various forms, such as term loans and working capital loans (cash credit facility), or a composite loan that covers both working capital and capital expenditure. Manufacturing units have a cap of 40% of the project cost for the working capital component, while service and trading sector units are limited to 60% of the project cost.
A recent official statement confirmed that the Government has approved the extension of the Prime Minister’s Employment Generation Programme (PMEGP) for an additional 5 years, spanning from 2021-22 to 2025-26.
What are the objectives of the PMEGP scheme?
The objective of PMEGP Scheme is to foster employment opportunities in both urban and rural regions of India through the initiation of new self-employment programs, micro-enterprises, and ventures.
A significant focus is placed on supporting self-employment opportunities for traditional artisans, as well as unemployed youth in rural and urban areas, thereby spreading economic benefits widely.
By creating stable and long-term employment prospects for rural and unemployed young individuals, the aim is to curtail the migration of these individuals to urban centers in search of work.
Moreover, this initiative seeks to enhance the earning potential of artisans and accelerate the growth of employment opportunities in both rural and urban settings.
What are the documents you need to submit while applying for PMEGP loan?
- Aadhaar Card
- PAN card
- Project report
- Special category certificate, if any
- Rural area certificate
- Education/ skill development training/ EDP certificate
- Authorisation letter
How much Government Subsidy and Loan is given under PMEGP?
| Beneficiary Categories under PMEGP | Beneficiary’s Share(of Total Project) | Subsidy Rate(from Govt.) – Urban | Subsidy Rate(from Govt.) – Rural |
| General | 10% | 15% | 25% |
| Special Categories, (including SC,ST,OBC, Minorities, Women, Ex-Servicemen, Transgenders, Differently-abled, NER, Aspirational Districts, Hill and Border areas(as notified by the Government) etc. | 05% | 25% | 35% |
Repayment Tenure
The repayment schedule may range between from 3 to 7 years after an initial moratorium as defined by the Bank.
How To Apply for Loan and Subsidy under PMEGP Scheme
Visit https://www.kviconline.gov.in/pmegpeportal/pmegphome/index.jsp (Official Website to apply for the PMEGP Scheme).
Apply for Second Loan of up to Rs. 1 crore under PMEGP
Under the PMEGP scheme, as well as the REGP and MUDRA schemes, individuals seeking to upgrade or expand their existing units now have the opportunity to apply for a second loan of up to Rs. 1 crore. Additionally, applicants can avail of a Government Subsidy ranging from 15% to 20% for this second loan, facilitating their ventures’ growth and development.