Prime Minister's Employment Generation Programme (PMEGP)

The PMEGP scheme helps entrepreneurs start small businesses in order to promote self-employment. The scheme offers collateral-free loans and subsidies to encourage new business ideas across India.

Highlights

• A flagship credit-linked subsidy scheme by the Ministry of MSME and Khadi and Village Industries Commission (KVIC), launched in 2008 and extended till 2026.
• The scheme has a total outlay of ₹13,554.42 crore, aimed at promoting entrepreneurship and self-employment across India.
• Helps you start your own business in manufacturing or services with financial support and government backing.
• Targets include setting up 4 lakh new projects, creating 30 lakh new jobs, and upgrading 1,000 existing units every year.

What is PMEGP?

The PMEGP Scheme helps you start a new business in the manufacturing or service sector with government support. It’s a loan + subsidy combo, wherein you don’t just get a loan from the bank, but the government shall also pay a part of it as a non-repayable subsidy. It helps you start your business easily and at a lower cost.

Objectives

• Kickstart your entrepreneurship journey by creating self-employment.
• Support local crafts and village industries to grow.
• Promote jobs in rural and urban areas, reducing migration.
• Push for balanced development by supporting businesses in less developed areas.

Benefits of the PMEGP Scheme

• Financial Support 
  You get access to bank loans + subsidy to set up your own non-farm business.
• No Collateral Needed (Up to ₹10 lakh)
  You don’t need to pledge any assets for loans up to ₹10 lakh.
• Local Job Creation
  Set up locally, hire locally, and reduce the need to migrate to cities.
• Extra Benefits for Special Categories
  Higher subsidies for SC, ST, women, and minorities.

Financial Assistance Under the PMEGP Scheme

Loan Limit:

• Up to ₹50 lakh for Manufacturing Industries
• Up to ₹20 lakh for Service Based Industries

Interest Rate:

As per the bank’s prevailing rates around 11-12% per annum (depending on the specific bank and loan size).

Repayment Period:

3 to 7 years, with a 6-month moratorium or grace period to stabilize your business.

1. Subsidy Breakdown for PMEGP Scheme

*SC, ST, OBC, Minorities, Women, Ex-Servicemen, Transgenders, Differently-abled, NER,

Aspirational Districts and Hill/Border areas.

• Once your project is approved, the subsidy is added as margin money, helping reduce the loan burden.
• The rest is a bank loan, making the overall setup more affordable and easier to manage.

2. Second Loan for Upgrading Your Existing PMEGP/MUDRA Unit

Are you running a business already funded by PMEGP or Mudra scheme? You can apply for a second loan to expand or modernise your business.

• Maximum Loan for Manufacturing: ₹1 crore
• Maximum Loan for Service: ₹25 lakh

*Use this second loan to upgrade tech, expand capacity, or modernise operations in your existing business.

Eligibility for PMEGP Loan

You are eligible if:

• You are 18+ (and 8th pass for projects over ₹10 lakh in manufacturing or ₹5 lakh in services).
• You are a first-time entrepreneur.
• You belong to an SHG, trust, society, or institution (if not already using a subsidy scheme).
• You plan to start a non-farm manufacturing or service business.

You are not eligible if:

• You already run a business.
• You have availed any other government subsidy.
• You have a poor credit history.
• Your activity is farm-based.

Documents Required for PMEGP Loan

• Aadhaar card & PAN card
• Educational qualification proof (if applicable)
• Caste certificate (for claiming a higher subsidy)
• Project report with cost breakdown
• Rent/ownership proof of business premises
• Udyam registration (preferred)
• A recent passport-size photo

Application Process for PMEGP Loan

You can apply:

• Online on the official PMEGP portal.
• Offline through designated banks or financial institutions.

Examples of Where PMEGP Loan Can be Used

• Readymade garment unit producing affordable fashion.
• Brass handicrafts business serving local and export markets.
• Pickles, juice, and jam units catering to regional tastes.
• Spices mill supplying packaged masalas.
• Women-led small enterprises driving local employment.
• A food processing unit making packaged snacks and essentials.