Prime Ministers Employment Generation Programme PMEGP

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Prime Ministers Employment Generation Programme PMEGP
Prime Ministers Employment Generation Programme PMEGP

What is PMEGP Scheme?

The Prime Minister’s Employment Generation Programme (PMEGP) is a credit-linked subsidy initiative administered by the Ministry of Micro, Small and Medium Enterprises (MSME). The programme is implemented through the Khadi and Village Industries Commission (KVIC) as the nodal agency, with support from Khadi and Village Industry Boards and District Industries Centres at the state and grassroots levels.

Introduced in 2008, PMEGP resulted from the merger of the PM Rojgar Yojana (PMRY) and the Rural Employment Generation Programme (REGP). The scheme is operational until 2025-26 and is expected to create over 40 lakh sustainable employment opportunities. Its primary objective is to promote non-agricultural micro-enterprises and entrepreneurial opportunities for youth across the nation.

PMEGP Scheme Highlights

Credit-Linked Subsidy

  • Offers financial assistance to set up micro-enterprises through a credit-linked subsidy programme.

Broad Implementation Network

  • Implemented by KVIC with support from Khadi Boards and District Industries Centres.

Employment Opportunities

  • Aims to create over 40 lakh long-term employment opportunities by promoting non-agricultural micro-enterprises.

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Wondering if you are eligible?

The eligibility requirements for PMEGP are: 

Eligible Individuals: 

  • Individuals must be aged 18 years or older.
  • No educational qualifications are required for projects costing up to ₹10 lakh in manufacturing and up to ₹5 lakh in the service sector.
  • For projects exceeding ₹10 lakh in manufacturing or ₹5 lakh in business or services, a minimum education qualification of VIII standard is mandatory.
  • Only new projects sanctioned under PMEGP are eligible for the scheme.
  • No educational qualifications are required for manufacturing projects costing up to ₹10 lakh or service sector projects costing up to ₹5 lakh. 
  • For projects exceeding ₹10 lakh in manufacturing or ₹5 lakh in the service sector, a minimum educational qualification of VIII standard is required. 
  • The scheme is applicable only to new projects sanctioned under PMEGP. 

Eligible Entities

  • Self-Help Groups (SHGs).
  • BPL category SHGs, provided they are not benefiting from any other scheme.
  • Institutions registered under the Societies Registration Act, 1860.
  • Production Co-operative Societies
  • Charitable trusts
  • Note: Existing units under PMRY, REGP or other government schemes, and units that have availed of government subsidy under any other state or central government scheme are not eligible for PMEGP.  
Prime Ministers Employment Generation Programme PMEGP

Documents required to get you started

Personal Identification & Eligibility Proof

  • Aadhaar Card
  • PAN Card
  • Caste Certificate (if applicable)
  • Special Category Certificate (if applicable)
  • Rural Area Certificate

Project & Skill Verification Proof

  • Project Report
  • Education/EDP/Skill Development Training Certificate
  • Any other documents can also be requested on a case-to-case basis.

Institutional Documents (if applicable)

  • Registration Certificate
  • Authorisation Letter/Copy of Bye-Laws Authorising Secretary or Relevant Authority to Apply
  • Certificate for Special Category (if applicable)

Key Benefits & Features

Versatile Business Finance

  • The PMEGP provides a comprehensive financial framework that includes cash credit facilities to meet the working capital requirements of businesses and Term Loans for capital expenditure (capex) needs. This flexibility allows entrepreneurs to tailor their financing options to align with their specific business needs, whether for day-to-day operations or for investing in growth. Additionally, the credit guarantee from CGTMSE eliminates the need for collateral, making it easier for startups and small businesses to access the funds they require without the burden of securing assets.
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Subsidy and Security

  • Under the PMEGP scheme, borrowers can benefit from a subsidy that ranges from 15% to 35% of the project cost, depending on the sector and project scale—up to ₹50 lakh for manufacturing and ₹20 lakh for services. This subsidy significantly alleviates the financial strain on borrowers, making it more feasible for them to repay their loans and sustain their operations. Furthermore, the relaxed collateral requirements enhance accessibility to credit, ensuring that a wider range of entrepreneurs can secure the financing they need to launch or expand their businesses.

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Marketing Support

  • The PMEGP extends valuable marketing support by providing a platform for beneficiaries to showcase their products through KVIC’s marketing sales outlets, depending on factors like quality and pricing. Additionally, KVIC organises various events, including exhibitions and buyer-seller meets at district, state, zonal, national, and international levels, which help PMEGP beneficiaries gain visibility and attract potential buyers. This proactive approach not only boosts sales opportunities for small businesses but also fosters networking and collaboration within the entrepreneurial ecosystem.

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Localised Employment

  • With a strong emphasis on empowering rural areas and promoting artisanal skills, the PMEGP encourages borrowers to explore self-employment opportunities within their local communities. This initiative helps to combat the trend of urban migration for employment by creating viable job prospects closer to home. By supporting local talent and businesses, the scheme contributes to sustainable economic development in rural regions, enhancing livelihoods and community resilience.

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Scheme Details

Maximum Project Cost

  • ₹50 lakh for the manufacturing sector.
  • ₹20 lakh for the business/service sector.
  • Remaining project costs can be financed through a regular loan from lending institutions.

Beneficiary Contribution

  • General category applicants are required to contribute 10% of the project cost.
  • For special categories (SC/ST, OBC, minorities, women, ex-servicemen, persons with disabilities, and residents of Northeast, hill, and border areas), the contribution is reduced to 5%.

PMEGP Subsidy

  • 15% subsidy for urban projects and 25% for rural projects for general category applicants.
  • 25% subsidy for urban projects and 35% for rural projects for special category applicants.

Support for New Entrepreneurs

  • The scheme includes the CGTMSE guarantee cover, facilitating easier access to credit.

Eligible Project Costs

  • Capital expenditure and one cycle of working capital can be included in the project cost.
  • Costs for ready-built, leased, or rented workshops/sheds can be included for a maximum of three years.
  • Land costs are not eligible for inclusion.

Eligibility Criteria

  • Only one person per family (defined as self and spouse) can apply for the PMEGP scheme.

Repayment Schedule

  • Repayment can be structured between three and seven years, following any moratorium period provided by the lending bank.

Interest Rate

  • The interest rate for PMEGP loans will be determined according to the terms and conditions set by the lending institution.
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More About PMEGP Scheme

PMEGP is vital for establishing new self-employment ventures in both urban and rural areas. It focuses on assisting unemployed youth and traditional artisans. By supporting project-based initiatives, the PMEGP loan fosters sustainable employment opportunities and enhances income potential in urban and rural settings. Moreover, the scheme aims to curb mass rural-to-urban migration by offering higher subsidies for rural projects. 

  • Flexible Business Finance 
    PMEGP offers cash credit for working capital needs and term loans for capital expenditure, supported by the CGTMSE credit guarantee which eliminates the need for collateral. 

  • Subsidies and Security 
    Subsidies ranging from 15% to 35% of the project cost (up to ₹50 lakh for manufacturing and ₹20 lakh for services) are available, easing repayment pressures and relaxing collateral requirements. 

  • Marketing Support 
    PMEGP units can potentially market their products through KVIC’s sales outlets, benefitting from exhibitions, workshops, and buyer-seller meets organised at district, state, and national levels. 

  • Local Employment 
    By focusing on rural areas and traditional artisans, PMEGP encourages self-employment opportunities locally, reducing the need for rural residents to migrate to urban centres for work. 

*The (Most Important Terms and Conditions) for each of our banking offerings features all the specific terms and conditions that govern their use. You must go through it thoroughly to fully understand the terms and conditions applicable to any banking product you choose.  

Frequently Asked Questions

The financial institutions include 27 public sector banks, all regional rural banks, co-operative banks approved by State Level Task Force Committee headed by Principal Secretary (Industries)/Commissioner (Industries), private sector scheduled commercial banks approved by State Level Task Force Committee headed by Principal Secretary (Industries)/Commissioner (Industries), and Small Industries Development Bank of India (SIDBI). 

Loans of up to ₹10 lakh are collateral-free and can be covered under CGFMU/CGTMSE. Amounts exceeding ₹10 lakh can be covered under CGTMSE.

It is an industry based in a rural area and produces goods or services with a maximum capital investment of ₹1 lakh in plain areas and ₹1.5 lakh in hill areas.

It can be an area with any population size but classified as a village in the revenue record of the state. It can also include a town area if the population of the town is not more than 20,000. 

The borrower must visit the PMEGP login e-portal and click on Apply in the "Application for New Business" option. Then, they must fill out the PMEGP online application and submit it in the PMEGP portal.