PMEGP, the Prime Minister's Employment Generation Programme, is a central government credit-linked subsidy scheme that helps individuals and groups set up new micro-enterprises by subsidising 15% to 35% of the project cost. Implemented by the Khadi and Village Industries Commission (KVIC) under the Ministry of Micro, Small and Medium Enterprises, PMEGP provides project loans through scheduled commercial banks with the government directly crediting the subsidy into the borrower's account. This page covers the full form, subsidy rates, eligible projects, how to apply, and what the current loan interest rate means for your business plan.
What is PMEGP?
PMEGP stands for Prime Minister's Employment Generation Programme. It is a centrally sponsored credit-linked subsidy scheme launched in 2008 by the Ministry of MSME, formed by merging two earlier schemes, the Prime Minister's Rojgar Yojana (PMRY) and the Rural Employment Generation Programme (REGP). The scheme's primary objective is to generate employment in rural and urban areas by facilitating the establishment of new micro-enterprises in manufacturing, agro-processing, and service sectors.
Under PMEGP, the government provides a margin money (subsidy) of 15% to 35% of the admissible project cost directly to the bank, reducing the effective loan burden on the borrower. The remaining project cost is financed through a bank term loan. The implementing agencies are KVIC at the national level, and State KVIC Directorates, State Khadi and Village Industries Boards (KVIBs), and District Industries Centres (DICs) at the state and district levels. In 2021–22, PMEGP was expanded to allow second loans for existing PMEGP units for upgradation.
Key Benefits of PMEGP
| Benefit Type | Amount / Description | Applicable Category |
|---|
| Maximum project cost (Manufacturing) | ₹50 lakh | All eligible applicants |
| Maximum project cost (Service / Trading) | ₹20 lakh | All eligible applicants |
| Subsidy, General category (Urban) | 15% of project cost | General category urban applicants |
| Subsidy, General category (Rural) | 25% of project cost | General category rural applicants |
| Subsidy, Special category (Urban) | 25% of project cost | SC / ST / OBC / Minorities / Women / Ex-servicemen / Differently-abled / NER / Hill & Border areas |
| Subsidy, Special category (Rural) | 35% of project cost | Same special categories in rural areas |
| Beneficiary contribution | 10% of project cost (special category) or 5% of project cost (general category) | Varies by category |
| Bank loan component | Balance after subsidy and beneficiary contribution | Sanctioned by scheduled commercial bank |
| Second loan for expansion | Up to ₹1 crore (manufacturing) / ₹25 lakh (services) for existing PMEGP units | Units with 3+ years of operation |
PMEGP Loan Interest Rate
| Parameter | Detail |
|---|
| Applicable interest rate | As per bank's prevailing lending rates (typically 11%–16% p.a. for micro-enterprise loans) |
| Government role | Subsidy (margin money) credited to loan account, not an interest subvention |
| Loan repayment period | 3 to 7 years, with an initial moratorium of 6–18 months |
| Collateral | No collateral required for loans up to ₹10 lakh (covered under CGTMSE); collateral may be required above ₹10 lakh at the bank's discretion |
Eligibility Criteria
| Criterion | Requirement |
|---|
| Age | 18 years and above |
| Educational qualification | Class 8 pass for projects above ₹10 lakh in manufacturing; Class 8 pass for projects above ₹5 lakh in services |
| Existing enterprise | Only new enterprises are eligible, existing units or units already availing government subsidy under other schemes are not eligible |
| Institution eligibility | Self-Help Groups (including those not covered under SGSY), charitable trusts, and registered societies are eligible in addition to individuals |
| Income ceiling | No income ceiling for individuals |
| Previous PMEGP loan | Individuals who have already benefitted from PMEGP, PMRY, or REGP are not eligible for a second PMEGP loan (only for unit upgradation under the second loan component) |
| Location | Both rural and urban applicants eligible; subsidy rate varies by location |
Eligibility is subject to revision. Verify at kviconline.gov.in/pmegpeportal before applying.
Documents Required
| Document | Purpose |
|---|
| Aadhaar card | Identity and KYC |
| PAN card | Tax identity verification |
| Address proof | Aadhaar / voter ID / utility bill |
| Educational qualification certificate | Required for projects above threshold amounts |
| Caste / category certificate | For SC / ST / OBC / Minority / Ex-serviceman / differently-abled categories |
| Special category certificate | Women / NER / Hill & Border area certificate (if applicable) |
| Project report | Detailed business plan with cost estimates, machinery list, raw material sources, and revenue projections |
| Rural area certificate | Issued by District Industries Centre (DIC) if applying as rural applicant |
| EDP training certificate | Certificate of completion of Entrepreneurship Development Programme training (required before loan disbursement) |
| Bank account details | For subsidy credit and loan processing |
| Photographs | Passport-size, recent |
PMEGP Eligible Project List (Categories)
| Sector | Examples of Eligible Projects |
|---|
| Agro-based / Food processing | Flour milling, dairy, oil extraction, fruit processing, pickles, bakery |
| Textile and hosiery | Handloom weaving, garment manufacturing, knitting, dyeing |
| Forest-based | Bamboo furniture, wood carving, paper making |
| Mineral-based | Tiles, bricks, pottery, stone cutting |
| Chemical-based | Detergents, soap, phenyl, agarbatti |
| Engineering and metal | Agricultural tools, welding unit, auto components |
| Service sector | Beauty parlour, repair workshop, printing press, laundry |
| Khadi and village industries | Spinning, weaving, honey processing, coir products |
Projects involving meat processing, tobacco, intoxicants, or any item banned under the KVIC Act are not eligible.
How to Apply for PMEGP
Online, via KVIC e-Portal
- Visit the official PMEGP e-portal at kviconline.gov.in/pmegpeportal.
- Click on Online Application Form for Individual or For Non-Individual as applicable.
- Register with your Aadhaar number and mobile number; complete OTP verification.
- Fill in personal details, project details, category, location (rural/urban), and activity description.
- Upload all required documents.
- Submit the application and note your application ID.
- The application is forwarded to the nearest KVIC / KVIB / DIC office for scrutiny.
- Shortlisted applicants are called for interview and EDP training.
- After training, the application is forwarded to the bank for loan processing.
- Bank sanctions the loan; government credits subsidy (margin money) directly to the loan account.
Offline, via District Industries Centre (DIC)
- Visit your nearest District Industries Centre (DIC) or KVIC / KVIB office.
- Collect the PMEGP application form.
- Submit the completed form with all documents and a detailed project report.
- Follow the same scrutiny, interview, and EDP training process as above.
PMEGP Subsidy Calculation, Worked Example
| Parameter | Amount |
|---|
| Total project cost | ₹20,00,000 |
| Subsidy rate (Special category, Rural) | 35% |
| Subsidy amount (government margin money) | ₹7,00,000 |
| Beneficiary contribution (10%) | ₹2,00,000 |
| Bank loan component | ₹11,00,000 |
State-Wise Implementation of PMEGP
| State | Implementing Agencies | State-Specific Notes |
|---|
| Uttar Pradesh | KVIC State Directorate, Lucknow; KVIBs; all DICs | Highest PMEGP disbursements by volume; strong DIC network across 75 districts |
| Maharashtra | KVIC State Directorate, Mumbai; KVIB; DICs | Strong agro-processing and textile project base; DICs in all 36 districts |
| Rajasthan | KVIC State Directorate, Jaipur; KVIB; DICs | Mineral-based and handicraft projects prominent; desert district applicants eligible for border area subsidy rates |
| Tamil Nadu | KVIC State Directorate, Chennai; TKVIB; DICs | Strong food processing and engineering project base; TKVIB runs parallel skill training |
| West Bengal | KVIC State Directorate, Kolkata; WBKVIB; DICs | Handloom and jute-based projects well-supported; NER-adjacent districts get special rates |
| Madhya Pradesh | KVIC State Directorate, Bhopal; MPKVIB; DICs | Forest-based and agro-processing strong; tribal area applicants eligible for special category rates |
| Gujarat | KVIC State Directorate, Ahmedabad; GKKVIB; DICs | Strong manufacturing and chemical-based project base; DICs in all 33 districts |
| Karnataka | KVIC State Directorate, Bengaluru; KKVIB; DICs | Service and food processing prominent in urban districts; rural agro-processing in North Karnataka |
| Bihar | KVIC State Directorate, Patna; BKVIB; DICs | High volume of individual applicants; EDP training infrastructure expanded post-2022 |
| Andhra Pradesh | KVIC State Directorate, Hyderabad; APKVIB; DICs | Aquaculture and food processing projects eligible; convergence with AP MSME policy |
