Prime Minister’s Employment Generation Programme (PMEGP) – Overview

The Prime Minister’s Employment Generation Programme (PMEGP) is a credit-linked subsidy scheme launched by the Government of India to promote self-employment and entrepreneurship. The scheme is implemented by the Khadi and Village Industries Commission (KVIC) at the national level, while at the state level, it is managed by KVIC Directorates, State Khadi Boards, District Industries Centers (DICs), and Banks.

Objectives of PMEGP

• To generate employment opportunities in rural and urban areas by supporting micro-enterprises.
• To facilitate credit support for setting up new ventures under the micro, small, and medium enterprises (MSME) sector.
• To enhance self-reliance among unemployed youth and rural artisans.
• To encourage traditional artisans and unemployed individuals to become entrepreneurs.

Benefits of PMEGP

• Financial Assistance:
  • The scheme provides a subsidy of 15% to 35% on project costs.
  • The remaining project cost is financed through banks as term loans.
• Loan Limit & Subsidy:
  • Maximum project cost: ₹50 lakh (manufacturing sector) and ₹20 lakh (service sector).
  • Government Subsidy:
    • Urban Areas: 15% (General Category) and 25% (Special Category – SC/ST/OBC/Minorities/Women).
    • Rural Areas: 25% (General Category) and 35% (Special Category).
• No Collateral Required:
  • Loans up to ₹10 lakh are covered under the Credit Guarantee Scheme.
• Interest Rates:
  • As per prevailing bank rates (typically 8% to 12% per annum).
• Repayment Tenure:
  • Flexible repayment period of 3 to 7 years, with a moratorium of 6 months to 1 year.
• Training & Skill Development:
  • Entrepreneurship Development Programme (EDP) training is mandatory before loan disbursement.

Eligibility Criteria for PMEGP

Who Can Apply?

• Individuals aged above 18 years.
• Minimum 8th standard pass (if the project cost exceeds ₹10 lakh for manufacturing and ₹5 lakh for service).
• Self-help groups (SHGs), cooperatives, and charitable trusts.
• Institutions registered under Societies Act, 1860 and production cooperatives.
• Businesses under MSME category.

Who Cannot Apply?

• Existing businesses or units already availing government subsidies.
• Any unit that has availed benefits under PMRY, REGP, or other similar schemes.

Documents Required for PMEGP Loan

• Aadhaar Card, PAN Card.
• Caste Certificate (if applicable).
• Business Project Report.
• Educational qualification proof.
• Bank account details.
• Rural/urban domicile certificate.
• EDP Training Certificate (if applicable).

Key Updates & Considerations

• The scheme has been extended under the Atmanirbhar Bharat initiative with an increased loan limit.
• Women entrepreneurs, SC/ST candidates, and differently-abled persons get higher subsidies.
• GST registration is mandatory for businesses with turnover exceeding ₹40 lakh (₹20 lakh for services).
• The scheme is not applicable for trading businesses (only manufacturing & service sector are eligible).

Conclusion

PMEGP is a highly beneficial scheme for first-time entrepreneurs looking to set up micro-enterprises with government support. It provides subsidized financial assistance, easy loan repayment terms, and business training, making it an attractive option for self-employment in India.