PMEGP
Prime Minister's Employment Generation Programme
PMEGP (Prime Minister's Employment Generation Programme) is India's flagship self-employment scheme — providing a one-time government subsidy (called Margin Money) of 15%–35% of project cost to individuals setting up new micro-enterprises in manufacturing, services, or food processing.
**How PMEGP Works:**
You identify a business opportunity, prepare a project report, and apply online. If selected by the Task Force Committee (KVIC/DIC), you approach a bank for a loan. The bank sanctions a loan covering 60%–90% of the project cost. The government subsidy (Margin Money) is deposited as a Term Deposit in your account — locked for 3 years. You only repay the bank loan portion (less the subsidy). After 3 years, the TDR is adjusted against your outstanding loan, effectively converting the subsidy into your own equity.
**The Margin Money Explained:**
Example: ₹10 lakh manufacturing project in rural area (general category):
- Government subsidy (Margin Money): 25% = ₹2.5 lakh (locked as TDR for 3 years)
- Borrower contribution: 10% = ₹1 lakh (your own money)
- Bank loan: 65% = ₹6.5 lakh
- You repay only ₹6.5 lakh to the bank (not the full ₹10 lakh)
- After 3 years, ₹2.5 lakh TDR is adjusted against outstanding loan
**Special Category — Higher Subsidy:**
SC/ST, OBC, Women, Ex-servicemen, Physically challenged, NE region residents, Hill and border area residents, Minorities, and Ex-offenders get 25% urban and 35% rural subsidy. This is a significant uplift — a woman entrepreneur in rural Rajasthan gets 35% subsidy vs 25% for a general man.
**What Businesses are Eligible:**
Almost any non-farm activity: food processing, textiles, wood products, metal fabrication, electronics repair, beauty salons, IT services, transport services, retail, etc. A "negative list" of ineligible activities includes: tobacco/cigarette products, beedi making, liquor, meat slaughter, certain chemicals. Check KVIC's negative list before applying.
**EDP Training — Mandatory:**
Entrepreneurship Development Programme training (minimum 2 weeks) is mandatory before bank disbursement. Training covers business planning, accounting basics, regulatory compliance. Many DICs and KVIC offices run EDP training centres. EDP training certificates must be submitted to the bank.
**2nd PMEGP for Existing Units:**
Existing PMEGP/PMRY/REGP units that have operated successfully for 3+ years can apply for a 2nd PMEGP loan up to ₹1 crore at 15% subsidy for business expansion/upgradation. This is a significant provision — scaling from small to medium scale with continued government support.
Key Objectives
- Create self-employment opportunities through new micro-enterprise formation.
- Provide capital subsidy to reduce cost barriers of setting up new micro-enterprises.
- Utilise traditional skills and natural resources of rural areas for productive enterprise.
- Reduce rural-to-urban distress migration by creating livelihoods in villages and small towns.
Benefits
Eligibility
- Any individual above 18 years
- Self Help Groups (SHGs — if not already receiving government subsidy)
- Charitable trusts, cooperative societies, production cooperatives (KVIB cases)
- Existing PMEGP/PMRY/REGP units — for 2nd loan (upgradation)
- For projects above ₹10 lakh (manufacturing) / ₹5 lakh (services): minimum Class VIII pass required
- Must be a NEW unit — not an existing running business
- Not a defaulter to any bank or financial institution
- Must complete minimum 2-week EDP training before bank disbursement
- Own contribution: 5% (special category) or 10% (general category) of project cost
- Individuals who have already availed subsidy under any other Central Government scheme
- Existing running enterprises (PMEGP is only for new units)
- Activities on KVIC's negative list (tobacco, liquor, meat, certain chemicals)
- Crop cultivation (pure agriculture) — only agri-allied and food processing eligible
How to Apply
Step 1: Identify your business idea and prepare a detailed Project Report (cost, revenue, employment plan)
Step 2: Register on kviconline.gov.in/pmegpeportal — complete application with project details
Step 3: Select implementing agency: KVIC (rural, national) / KVIB (khadi/village industries) / DIC (urban, local)
Step 4: Application scrutinised by bank, KVIC/DIC — Task Force Committee interview
Step 5: On selection, approach designated bank with project report for loan
Step 6: Bank appraises project — sanctions loan
Step 7: Complete minimum 2-week EDP training at KVIC/DIC training centre
Step 8: Submit EDP certificate to bank — bank disburses loan
Step 9: Margin Money (subsidy) placed as Term Deposit in your account (locked 3 years)
Step 10: Run enterprise successfully — after 3 years, TDR adjusted against outstanding loan
Required Documents
Frequently Asked Questions
What is Margin Money in PMEGP and how does it reduce my loan burden?
Margin Money is the government subsidy portion (15%–35% of project cost). It is deposited as a Term Deposit (TDR/FDR) in your bank account — locked for 3 years. Example: ₹10 lakh project, 25% subsidy = ₹2.5 lakh TDR. You repay only the bank loan portion (65%). After 3 years, ₹2.5 lakh TDR is adjusted against your outstanding loan — reducing your principal. You never receive the subsidy as cash — it comes as loan reduction.
What is the maximum subsidy amount under PMEGP?
Maximum subsidy for manufacturing (₹50 lakh project): General category urban: 15% = ₹7.5 lakh; General category rural: 25% = ₹12.5 lakh; Special category urban: 25% = ₹12.5 lakh; Special category rural: 35% = ₹17.5 lakh. For service enterprises (max ₹20 lakh): proportionally lower. Special category = SC/ST/OBC/Women/Ex-servicemen/Minorities/PwD/NER residents.
Who is the 'special category' in PMEGP that gets higher subsidy?
Special category beneficiaries who get 25% urban and 35% rural subsidy (vs 15%/25% for general): SC (Scheduled Castes), ST (Scheduled Tribes), OBC (Other Backward Classes), Women, Physically challenged (PwD), Ex-servicemen, Ex-offenders, hill and border area residents, North-Eastern region residents, and Minorities (as notified). Present the relevant certificate (caste/disability/ex-serviceman) with your application.
What is EDP training and where do I get it done?
EDP (Entrepreneurship Development Programme) is a mandatory 2-week training covering business planning, accounting, regulatory basics, and scheme features. It must be completed before bank loan disbursement. Training is conducted by: KVIC training centres, state KVIB offices, RSETIs (Rural Self Employment Training Institutes), and selected NGOs. KVIC's portal has a training centre locator. The training is FREE for PMEGP applicants.
My PMEGP application has been pending for 3 months. What should I do?
Step 1: Log in to kviconline.gov.in/pmegpeportal → Check Application Status. Step 2: If status shows 'Under Review by Task Force', follow up directly with your implementing agency (DIC or KVIC office). Step 3: If status is stuck at bank stage, follow up with the bank's MSME nodal officer. Step 4: Escalate to KVIC state/national office if DIC is unresponsive. Step 5: Use MSME grievance portal at champions.gov.in for formal escalation.
Can women get a higher subsidy under PMEGP?
Yes. Women are in the 'special category' and receive 25% subsidy in urban areas and 35% in rural areas — compared to 15%/25% for general category. A woman entrepreneur setting up a food processing unit in a rural area on a ₹20 lakh project gets ₹7 lakh subsidy (35%) vs a man's ₹5 lakh (25%). Women's self-help groups (SHGs) that apply through KVIB also qualify as special category.