Published on Oct 15, 2023Updated on Feb 7, 2025
In August 2008, the Government of India sanctioned the creation of a novel credit-linked subsidy program known as the PMEGP Scheme. The PMEGP's full form is the Prime Minister's Employment Generation Programme. This scheme is implemented by the Khadi and Village Industries Commission (KVIC) to provide financial assistance to set up new projects, and to generate employment and increase the wage-earning capacity of workers. Under this scheme, the Government provides a subsidy of 15-35% of the project as described in detail below. It empowers individuals as well as promotes the growth of the MSME sector. The article below talks about the eligibility, guidelines, and loan limits of the PMEGP Scheme.
The four core objectives for which the PMEGP Scheme was initiated are as follows:
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The eligibility criteria for the PMEGP Scheme are as follows:
The PMEGP scheme provides financial assistance in the form of a subsidy and a loan to beneficiaries to set up their enterprises. The maximum cost of the project under the scheme is divided into two parts: Project Cost and Beneficiary Contribution.
The project cost includes both capital expenditure (building, machinery, equipment, etc.) and working capital for the proposed business. The project cost limit depends on the sector and the location of the business:
The lender will sanction 90% of the project cost in the case of General Category beneficiaries and 95% in the case of Special Category beneficiaries, and disburse the full amount suitably for the setting up of the project. The lender will finance Capital expenditures in the form of term loans and working capital in the form of cash credit.
The beneficiaries are required to contribute a certain percentage of the project cost, which varies based on the category of the beneficiary and the location of the business. General category beneficiaries contribute 10% of the project cost. Special category beneficiaries contribute 5% of the project cost.
The subsidy component of the PMEGP loan yojana is as follows:
A normal rate of interest shall be charged. The repayment schedule may range between 3 to 7 years after an initial moratorium, as may be prescribed by the concerned financial institution.
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Below are the steps to apply for PMEGP online for an individual:
To track the status of the application, log in to the PMEGP e-tracking system. Enter ‘Applicant Id’ and click on ‘View Status’ to check the status.
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The PMEGP scheme is a significant step towards fostering entrepreneurship and addressing unemployment in India. By offering financial assistance and support to aspiring entrepreneurs, the scheme not only empowers individuals but also contributes to the growth of the micro, small, and medium enterprise sector. As the scheme continues to evolve, it holds the potential to play a crucial role in India's journey toward economic self-reliance and prosperity.
Consider SMFG India Credit as your financial partner in availing the PMEGP loan. We offer 100% paperless application process for business loans ranging from INR 50,000 to INR 75,00,000*, ensuring that you have access to the funds you need. With flexible tenures starting from 12 months and extension up to 48 months, we offer convenient repayment options that suit your preferences.
* Please note that this article is for your knowledge only. Loans are disbursed at the sole discretion of SMFG India Credit. Final approval, loan terms, disbursal process, foreclosure charges and foreclosure process will be subject to SMFG India Credit's policy at the time of loan application. If you wish to know more about our products and services, please contact us
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