Unemployment is one of the biggest challenges in India, and to address this issue, the Government of India has introduced various schemes to promote self-employment. One such major initiative is the Prime Minister’s Employment Generation Programme (PMEGP). This scheme aims to provide financial assistance to individuals for setting up micro-enterprises in the non-farm sector, thereby generating employment opportunities.
PMEGP is a credit-linked subsidy scheme that is implemented at the national level by the Khadi and Village Industries Commission (KVIC). At the state level, the scheme is carried out through KVIC Directorates, Khadi and Village Industries Boards (KVIBs), District Industries Centres (DICs), and banks.
Objective of PMEGP
The main objectives of the Prime Minister’s Employment Generation Programme are:
- To promote self-employment by helping individuals establish small businesses and micro-enterprises.
- To provide financial assistance to unemployed youth, women, minorities, and people from weaker sections of society.
- To encourage economic development in both rural and urban areas.
- To generate sustainable employment opportunities in the non-farm sector.
Financial Assistance Under PMEGP
PMEGP provides financial aid to individuals for starting new businesses. The maximum project cost that can be funded under this scheme is:
- ₹50 lakh for the manufacturing sector.
- ₹20 lakh for the business/service sector.
Subsidy and Beneficiary Contribution
The subsidy and financial contribution vary based on the category of the applicant and the location of the business:
- General Category Applicants:
- Must contribute 10% of the total project cost.
- Subsidy for urban areas: 15% of the project cost.
- Subsidy for rural areas: 25% of the project cost.
- Special Category Applicants (SC/ST/OBC, Women, Ex-Servicemen, Transgenders, Differently-abled, NER, Aspirational Districts, Hill and Border Areas):
- Must contribute 5% of the total project cost.
- Subsidy for urban areas: 25% of the project cost.
- Subsidy for rural areas: 35% of the project cost.
Upgradation of Existing Enterprises
Apart from funding new businesses, PMEGP also provides a second loan for the expansion or modernization of existing PMEGP or MUDRA units.
- Manufacturing Sector:
- Maximum project cost eligible for financial assistance: ₹1 crore.
- Subsidy: 15% of the project cost (20% for North Eastern and Hill States).
- Business/Service Sector:
- Maximum project cost eligible for financial assistance: ₹25 lakh.
- Subsidy: 15% of the project cost (20% for North Eastern and Hill States).
Who Can Apply for PMEGP?
To be eligible for financial assistance under PMEGP, applicants must fulfill the following conditions:
- Must be at least 18 years old.
- Must have passed at least 8th standard for projects costing more than ₹10 lakh (Manufacturing Sector) and more than ₹5 lakh (Business/Service Sector).
- Only new businesses are eligible – existing businesses that have already received a government subsidy under other schemes are NOT eligible.
- Existing PMEGP/REGP/MUDRA units can apply for a second loan for expansion.
How to Apply for PMEGP?
Applicants can apply for a PMEGP loan through both online and offline modes.
Online Application Process:
- Visit the official PMEGP e-portal.
- Sign up as a fresh applicant and complete the registration form.
- Upload the required documents, such as Aadhar card, educational qualification certificates, project report, and bank details.
- Submit the application for approval.
- Once approved, the bank will process and disburse the loan amount.
Offline Application Process:
- Visit the nearest KVIC, KVIB, or DIC office to collect the PMEGP application form.
- Provide the essential information and include the required documents.
- Submit the completed application form to the implementing agency.
- The application will be reviewed, and if approved, the loan will be sanctioned by the bank.
Other Related Schemes Under PMEGP
1. Credit Guarantee Trust Fund for Micro & Small Enterprises (CGT SME)
- This scheme provides collateral-free loans to support small businesses and startups.
- Entrepreneurs can avail loans without the need to mortgage assets, making it easier to start and expand businesses.
2. Interest Subsidy Eligibility Certificate (ISEC)
- This scheme provides working capital loans at a concessional interest rate of 4%.
- The Central Government pays the difference between the bank’s lending rate and 4% interest.
Who Can Apply for ISEC?
- Khadi institutions with a valid Khadi certificate.
- Institutions registered with KVIC or State KVIBs.
How to Apply for ISEC?
- The applicant must apply to a financing bank with an ISEC certificate issued by KVIC.
- The bank will provide the working capital loan, and the government will reimburse the interest subsidy.