PMEGP Scheme — 35% Subsidy, Loan up to ₹25 Lakh

What is PMEGP?

Prime Minister's Employment Generation Programme (PMEGP) is a central government scheme that provides financial assistance for setting up new micro-enterprises in the non-farm sector. The scheme combines a bank loan with a government subsidy (called "margin money") to help entrepreneurs start a manufacturing, service, or business enterprise.

PMEGP is implemented by the Khadi and Village Industries Commission (KVIC) at the national level, and through state KVIC offices, Khadi and Village Industries Boards (KVIBs), and District Industries Centres (DICs).

How Much Loan and Subsidy?

How it works:

• You contribute at least 5% of project cost (applicant's contribution, called "promoter's contribution")
• Government gives subsidy (margin money): 15–35% of project cost directly
• Bank gives a loan: for the remaining amount (60–80% of project cost)

Example:

• Project cost: ₹20 lakh (manufacturing)
• Your contribution (5%): ₹1 lakh
• Government subsidy (25% for rural general): ₹5 lakh
• Bank loan (70%): ₹14 lakh

The subsidy is held in a "Term Deposit" for 3 years; if you run the business for 3 years, it is released and adjusts against your loan.

Who is Eligible?

• Age: 18 years and above
• Education: Class 8 pass (for projects above ₹10 lakh in manufacturing; for service sector no minimum education)
• New enterprise only — existing businesses and expansion of existing units are not eligible
• No income limit — open to all
• Must not have received any subsidy from any other government scheme for the same project
• Beneficiary should not be a defaulter to any bank/financial institution

Who can apply:

• Individual entrepreneur
• SHGs (Self Help Groups)
• Charitable Trusts
• Production Co-operative Societies
• Societies registered under Societies Registration Act, 1860

What kind of businesses:

• Manufacturing: food processing, garments, handicrafts, electronics, paper, pottery, furniture, etc.
• Service: salons, repair shops, tailoring, catering, IT service centers, etc.
• Trade/business: retail shops are generally not eligible (PMEGP is for manufacturing and services, not trading)

Documents Required

1. Aadhaar card
2. PAN card
3. Caste certificate (for SC/ST/OBC/Minority)
4. Special category certificate: ex-serviceman, disability, NER
5. Educational qualification certificates (Class 8 / above)
6. Project Report — detailed business plan including machinery, raw material, market, cost of production, profit estimate
7. Bank account details (pre-existing, at least 6 months old)
8. If SHG/Trust/Society: registration certificate
9. Skill training certificate (if available — helps application)
10. 2 photographs

How to Apply Online — Step by Step

1. Go to kviconline.gov.in → click "PMEGP Online Application" or directly visit pmegp.kviconline.gov.in
2. Click "Online Application Form for Individual" (or for SHG/Institution as applicable)
3. Register with mobile and email ID — OTP verification
4. Fill the form:
   • Personal details (name, age, address, category)
   • Project details (business type, location — urban or rural, project cost, machinery details)
   • Proposed employment (how many jobs the project will create)
5. Upload required documents
6. Submit the application — you will receive an application ID
7. The application goes to the District Industries Centre (DIC) or KVIB/KVIC office for scrutiny
8. You may be called for a personal interview at the DIC office
9. If shortlisted, your application is forwarded to a bank
10. Bank sanctions the loan
11. You start the project and claim the subsidy
12. Subsidy (margin money) is released to the bank and locked in Term Deposit for 3 years

Important: Project Report Requirement

A project report (DPR — Detailed Project Report) is mandatory and the most critical document. It should include:

• Description of the business and products/services
• Total project cost (machinery, land/rent, raw material, working capital)
• How you will market your products
• Projected income and expenses for 3–5 years
• Employment to be created

KVIC offices, DICs, and many NGOs help prepare project reports. Some Chartered Accountants also prepare DPRs for a fee.

How to Check PMEGP Application Status

1. Go to kviconline.gov.in → "Application Status"
2. Enter your application ID
3. Current status is displayed (under review / forwarded to bank / approved / rejected)

Frequently Asked Questions

What is the maximum loan under PMEGP?

₹50 lakh for manufacturing projects; ₹20 lakh for service/business projects. Project cost includes machinery, equipment, land/rent, and working capital.

Can I apply if I am not educated?

For projects up to ₹10 lakh (manufacturing) or any service sector project, there is no minimum education requirement. For manufacturing projects above ₹10 lakh, Class 8 pass is required.

Is trading (buying and selling) eligible?

No — PMEGP is for manufacturing and services, not pure trading activities. A retail shop for products you manufacture is acceptable, but a trading/wholesale business is not.

How long does it take?

The process typically takes 3–6 months from application to loan disbursement, depending on the bank and district office workload. The interview and bank processing can take several weeks.

Can I apply if I already have a business?

No — PMEGP is only for new enterprises. If you have an existing business (even if small or informal), you are not eligible. However, you can apply for a new, separate unit.

What happens to the subsidy after 3 years?

After 3 years of running the business, the subsidy amount (locked in Term Deposit) is applied toward reducing your outstanding loan. Effectively the loan amount decreases by the subsidy amount.

Official Links

• Apply online: kviconline.gov.in
• Direct PMEGP portal: pmegp.kviconline.gov.in
• Scheme details: myscheme.gov.in
• KVIC helpline: 022-26714420 or your state KVIC/KVIB office