The Prime Minister's Employment Generation Programme (PMEGP) gives a capital subsidy - "margin money" - on bank loans for new micro enterprises.
Limits
- Maximum project cost: ₹50 lakh for manufacturing, ₹20 lakh for service / business.
- Second loan for upgrading an existing PMEGP unit is available up to higher limits for good performers.
Subsidy and own contribution
| Category | Own contribution | Subsidy - urban | Subsidy - rural |
|---|---|---|---|
| General | 10% | 15% | 25% |
| Special (SC/ST/OBC, women, minorities, ex-servicemen, divyang, NE region, hill and border areas, transgender) | 5% | 25% | 35% |
The bank lends the rest. The subsidy is usually kept as a term deposit for about 3 years and then adjusted against the loan, provided the unit is running.
Eligibility
- Age 18 or above.
- For projects above ₹10 lakh (manufacturing) or ₹5 lakh (service), at least VIII pass.
- Only new units; existing units and those already subsidised under another government scheme aren't eligible.
- One person per family.
How to apply
- Apply online on the PMEGP e-portal (kviconline.gov.in) through KVIC, KVIB or DIC.
- Upload the project report, Aadhaar, caste / category certificate if applicable, education proof, rural area certificate if applicable.
- The agency forwards to the bank; the bank appraises and sanctions.
- Complete the EDP training (entrepreneurship development) before the subsidy is released.
Tips
- The project report must show a healthy DSCR - banks reject weak projections even with the subsidy.
- Get machinery quotations in advance.
- Choose the sector carefully - some activities are on the negative list.
Make a PMEGP project report with the subsidy and own contribution worked in.