Details

The Prime Minister’s Employment Generation Programme (PMEGP) is a flagship credit-linked subsidy scheme of the Government of India, launched in August 2008. It is administered by the Ministry of Micro, Small, and Medium Enterprises (MSME) with the primary objective of creating sustainable employment opportunities. The programme facilitates the establishment of micro-enterprises in the non-farm sector, covering both rural and urban areas.

PMEGP was introduced as a consolidation of two earlier schemes, namely the Prime Minister’s Rojgar Yojana (PMRY) and the Rural Employment Generation Programme (REGP), both of which were in effect until March 31, 2008. Recognizing the success and potential of this initiative, the Government approved its continuation under the 15th Finance Commission cycle, extending it for a period of five years from 2021–22 to 2025–26. For this duration, a financial outlay of ₹13,554.42 crore has been sanctioned, aiming to support the establishment of around 4,00,000 projects and generate nearly 30,00,000 jobs, with an average of eight persons employed per unit. In addition, the scheme provides for the annual upgradation of 1,000 existing units to ensure sustained growth and productivity.

Objectives of PMEGP

The PMEGP is designed with a comprehensive set of objectives that address both employment generation and economic growth. Its key aims include:

1. Employment Creation: To generate new job opportunities across rural and urban regions through the promotion of self-employment ventures, projects, and micro-enterprises.

2. Empowerment of Artisans and Youth: To bring together dispersed traditional artisans and unemployed youth, and offer them opportunities to establish self-employment ventures at or near their place of residence.

3. Reduction of Migration: To ensure sustainable livelihood options for artisans and unemployed youth, thereby helping to curb the large-scale migration of rural youth to cities in search of work.

4. Enhancement of Earning Capacity: To increase the wage-earning ability of workers and artisans while contributing to the overall growth of employment in rural and urban sectors.

Implementing Agencies

The implementation framework of PMEGP is robust, involving multiple agencies at both the national and state levels:

1. National Level: The Khadi and Village Industries Commission (KVIC), functioning under the Ministry of MSME, serves as the nodal agency responsible for implementing the scheme across the country.

2. State Level: The scheme is carried out through the State offices of KVIC, State Khadi and Village Industries Boards (KVIBs), District Industries Centres (DICs), and the Coir Board for coir-related activities. Banks play a crucial role in providing financial support under the scheme. The government may also involve other appropriate agencies to strengthen its outreach and effectiveness.

Benefits

The Prime Minister’s Employment Generation Programme (PMEGP) extends a wide range of benefits to encourage entrepreneurship and provide financial assistance for the establishment and growth of micro-enterprises. The scheme ensures that funds are distributed strategically under two major components—Margin Money Subsidy and Backward and Forward Linkages—while also defining clear levels of support for both new enterprises and the upgradation of existing units.

1. Margin Money Subsidy

A significant advantage of the scheme lies in the provision of margin money subsidy, which reduces the financial burden on entrepreneurs. Each year, funds are allocated through the Union Budget for the disbursement of subsidies to promote the establishment of new micro-enterprises and units. In addition, from the annual allocation, an amount of ₹100 crore—or such other sum as may be approved by the competent authority—is reserved specifically for the upgradation of units established under PMEGP, REGP, or MUDRA. This dual focus ensures both the promotion of new ventures and the strengthening of existing enterprises.

2. Backward and Forward Linkages

Another noteworthy feature of PMEGP is the allocation of funds for backward and forward linkages. Around 5% of the total annual budget allocation, or as approved by the competent authority, is earmarked for activities that enhance awareness, monitoring, and skill development. These funds are utilized for organizing awareness camps, workshops, exhibitions, and training programmes, along with state and district-level monitoring meetings. They also cover activities such as banker interactions, publicity campaigns, Entrepreneurship Development Programmes (EDPs), physical verification and geo-tagging of units, and impact assessment studies.

In addition, funds are directed towards setting up Entrepreneurship Facilitation Centres (EFCs), establishing Centres of Excellence (CoEs), engaging field experts and data entry operators, upgrading IT infrastructure, instituting awards, and running call centre facilities. These measures, overseen by the Khadi and Village Industries Commission (KVIC), ensure strong institutional support for entrepreneurs.

Levels of Support under PMEGP

PMEGP offers financial support at two levels—one for setting up new enterprises and the other for upgrading existing units.

(a) Support for New Enterprises

General Category Beneficiaries:

1. Contribution from beneficiary: 10% of the project cost

2. Subsidy: 15% of the project cost in urban areas and 25% in rural areas

Special Category Beneficiaries (including SC, ST, OBC, Minorities, Women, Ex-servicemen, Transgender persons, Differently-abled persons, residents of North Eastern Region, Aspirational Districts, Hill and Border Areas, etc.):

Contribution from beneficiary: 5% of the project cost

Subsidy: 25% of the project cost in urban areas and 35% in rural areas

Note:

1. The maximum project cost eligible for subsidy in the manufacturing sector is ₹50 lakh.

2. The maximum project cost eligible for subsidy in the business/service sector is ₹20 lakh.

3. Any balance amount of the project cost, excluding the beneficiary’s contribution, will be financed by banks.

4. If the total project cost exceeds these limits, banks may provide additional funds without government subsidy.

(b) Support for Upgradation of Existing Units

Eligible Beneficiaries: All categories of entrepreneurs running existing PMEGP, REGP, or MUDRA units.

Contribution from beneficiary: 10% of the project cost

Subsidy: 15% of the project cost (20% in North Eastern Region and Hill States)

Note:

1. For the manufacturing sector, the maximum project cost eligible for subsidy during upgradation is ₹10 crore, with a subsidy limit of ₹15 lakh (₹20 lakh for North Eastern Region and Hill States).

2. For the business/service sector, the maximum project cost admissible for subsidy during upgradation is ₹25 lakh, with a subsidy limit of ₹3.75 lakh (₹5 lakh for North Eastern Region and Hill States).

3. The remaining portion of the project cost, apart from the beneficiary’s contribution, will be financed by banks.

4. If the project cost exceeds ₹10 crore (manufacturing) or ₹25 lakh (business/service sector), banks may provide additional funding, though without any subsidy support.

Eligibility

Eligibility for New Enterprises (Units)

1. Age Requirement: Any individual who is 18 years or older is eligible to apply.

2. Income Limit: There is no income ceiling, allowing beneficiaries from all economic backgrounds to access support.

3. Educational Qualification: For projects with a cost exceeding ₹10 lakh in the manufacturing sector and ₹5 lakh in the business/service sector, the applicant must have completed at least 8th standard education.

4. Project Specification: Assistance is available only for new projects sanctioned specifically under PMEGP.

5. Exclusion of Existing Units: Units that are already operational under PMRY, REGP, or any other central or state government schemes, or those that have received government subsidies under any other scheme, are not eligible for PMEGP benefits.

Eligibility for Upgradation of Existing Units

1. Completion of Lock-in Period: Margin money (subsidy) claimed under PMEGP must have been successfully adjusted upon completion of the 3-year lock-in period.

2. Repayment of First Loan: The first loan received under PMEGP, REGP, or MUDRA must be fully repaid within the stipulated timeframe.

3. Unit Performance: The existing unit should be profit-making, demonstrate good turnover, and show potential for further growth through modernization or upgrading of technology.

Reservation, Preference, and Priority

Priority will be given to individuals affected by natural calamities or disasters in areas officially declared as disaster-affected by the Ministry of Home Affairs, in accordance with Section 2(d) of the Disaster Management Act, 2005.

Exclusions

Exclusions for New Enterprises (Units)

1. Existing Units: Units already established under PMRY, REGP, or any other scheme of the Central or State Government, as well as units that have previously received government subsidies under any scheme, are not eligible to apply for PMEGP.

2. Family Restriction: Financial assistance under PMEGP is restricted to one person per family, which includes the applicant and their spouse. This ensures wider distribution of benefits across families.

Negative List of Activities

Certain activities and businesses are explicitly prohibited under PMEGP. These restrictions are in place to maintain social responsibility, comply with legal regulations, and promote sustainable development. The prohibited activities include:

1. Industries or Businesses Related to Meat and Intoxicants:

A). Any industry connected with meat processing or serving.

B). Manufacturing, processing, or sale of intoxicants such as beedis, pan, cigars, cigarettes, and liquor.

C). Running hotels, dhabas, or sales outlets that serve alcohol.

D). Preparation or production of tobacco as a raw material.

E). Tapping of toddy for commercial sale.

2. Agricultural or Plantation Activities:

A). Cultivation of crops or plantations such as tea, coffee, rubber, and other similar plantations.

B). Sericulture (cocoon rearing), horticulture, floriculture, and animal husbandry as primary activities are not permitted.

C). Exceptions: Value addition, off-farm, or farm-linked activities related to these sectors (e.g., processing of horticultural or sericulture products) are allowed under PMEGP.

3. Locally Prohibited Activities:

Any activity prohibited by local government or authorities due to environmental or socio-economic reasons cannot be undertaken under the scheme.

Application Process

1. Application for New Units

To apply for financial assistance for a new enterprise, the following steps must be followed:

A). Visit the official PMEGP portal at https://www.kviconline.gov.in/pmegpeportal/pmegphome/index.jsp

B). Click on the “Apply” button under the “Application For New Unit” tab.

C). Fill in all required details on the application form available at https://www.kviconline.gov.in/pmegpeportal/jsp/pmegponline.jsp and click Save Applicant Data.

D). On the next page, upload the necessary documents and proceed to complete the final submission.

2. Application for Existing Units (Second Loan)

Entrepreneurs seeking financial assistance for the upgradation of existing PMEGP/REGP/MUDRA units must follow these steps:

A). Visit the official PMEGP portal at https://www.kviconline.gov.in/pmegpeportal/pmegphome/index.jsp

B). Click on the “Apply” button under the “Application For Existing Units (2nd Loan)” tab.

C). Access the online application form at https://www.kviconline.gov.in/pmegpeportal/pmegpIILOAN/index.jsp and complete the form with all required details.

D). Upload the necessary supporting documents and proceed to submit the application.

3. Login for Registered Applicants (Second Loan)

Applicants who have previously registered for PMEGP and wish to access the portal for second loan subsidy or unit upgradation can follow these steps:

A). Visit the login page at https://www.kviconline.gov.in/pmegpeportal/pmegpIILOAN/applicantLogin.jsp

B). Enter the User ID and Password provided during registration.

D). Click Log In to access the application dashboard and proceed with submission or tracking of the second loan application.

Documents Required

Essential Documents

1. Caste Certificate: Required for applicants belonging to Scheduled Castes (SC), Scheduled Tribes (ST), Other Backward Classes (OBC), or any other category as defined by the government.

2. Special Category Certificate (if applicable): Applicable for women, ex-servicemen, differently-abled persons, minorities, residents of North Eastern Region (NER), aspirational districts, hill and border areas, and other notified special categories.

3. Rural Area Certificate: Required to validate the rural location of the applicant if applying under rural area subsidy rates.

4. Project Report: A detailed project report outlining the proposed enterprise, investment plan, expected turnover, employment generation, and operational strategy.

5. Education / EDP / Skill Development Training Certificate: Documents to demonstrate the applicant’s educational qualifications or completion of Entrepreneurship Development Programmes (EDPs) or other skill development training relevant to the proposed enterprise.

6. Other Applicable Documents: Any additional documents as required by the implementing authorities to verify identity, address, or other eligibility criteria.

Frequently Asked Questions