PMEGP stands for Prime Minister’s Employment Generation Programme. It is a credit-linked subsidy programme administered by the Ministry of Micro, Small & Medium Enterprises (MoMSME) Khadi & Village Industries Commission (KVIC) to generate employment for the youth of the country.

When was PMEGP Launched?

Initiation of PMEGP took place in the year 2008. The merging of  Prime Minister’s Rojgar Yojana (PMRY) and Rural Employment Generation Programme (REGP) gave birth to the PMEGP programme to employ youth in both the Urban and Rural areas.

Khadi & Village Industries Commission (KVIC) implemented the scheme at the national level as it is the single nodal agency that comes under the MoMSME’s administrative control.

State Khadi & Village Industries Boards, State KVIC Directorates and District Industries Centres (DICs) and banks implemented the scheme at the state level.

What is the purpose of the PMEGP scheme?

India has a majority of the young population who are educated but do not get better employment opportunities due to massive competitions and the absence of right skills appropriate for the job. Hence the primary purpose of the scheme is :

  • To set up the novel micro-enterprises or projects that are self-employed ventures in both rural and urban areas for employment generation.
  • To prevent migration of the rural people to the bigger cities for work, generally, those who are traditional artisans and unemployed youth, by providing them stable, continuous and sustainable employment.
  • To raise the artisan’s earning capacity, which will automatically result in the hike the employment of both urban and rural areas.

How does the PMEGP scheme work?

How does the PMEGP scheme work

What are the essential points to remember about the PMEGP scheme?

  • Maximum project cost for manufacturing is Rs 25 lakhs and for service is Rs 10 lakhs.
  • The scheme is put into effect in rural and urban areas in the ratio 30: 30: 40 between KVIC/DIC/KVIB.
  • Only new businesses or setups will get assistance under this scheme.
  • Existing businesses who have availed any Government subsidy will be barred to participate in this scheme.
  • The assistance does not apply to the businesses that are in negative lists.
  • The financial assistance under the scheme is limited to only one person of the family.
  • Lock-in period for a government subsidy is 3 yrs.

Who can apply for the loan under PMEGP scheme?

  • Any individuals who are above 18 yrs of age
  • The education criteria should be at least class 8 passed if they want to set up a manufacturing unit costing over 10 lakhs or a service unit costing over 5 lakhs with the PMEGP support
  • Self Help Groups not availed any other benefit of this scheme
  • Charitable Trust
  • Production-based cooperative societies
  • Institutions registered under Societies Registration Act, 1860

What are the subsidy and funding provided under PMEGP scheme?

The breakup of subsidy and funding  in the following table :

BeneficiariesBeneficiary Contribution
(Of total project)
Subsidy rate provided  – Urban Beneficiary

 

Subsidy rate provided  – Rural Beneficiary
General category 5%15%25%
Special category (SC, ST, OBC, Minorities, Women, ex-defence employees, Disabled people  and people from the North East region, hilly and border areas10%25%35%

Banks will fund the rest of the amount in the form of term loans to these businesses. The interest will be around 11 to 12 %.

Which bank gives a PMEGP loan?

27 Public Sector Banks, Cooperative Banks, Regional Rural Banks (RRB), and Private Scheduled Commercial Banks approved by respective State Task Force Committee.

How to apply for PMEGP loan?

DIC and KVIC put notification for PMEGP in the newspaper every year. Lead Bank Officer coordinates the selection of entrepreneurs with banks and nodal agencies such as DIC and KVIC. The entrepreneurs should contact him for proper guidance.

One can apply for PMEGP through following steps :

Step 1: The individual has to prepare a project report on the business.

Step 2: He/She needs to identify a place where he/she wants to start the project.

Step 3: He should apply online on KVIC website https://www.kviconline.gov.in/pmegp.jsp

  • Individual to click on the online application form for individual or non – individual
  • Enter details like name, sponsoring agency, type of activity, first financing bank, etc. to fill the entire form
  • Click on ‘Save applicant data’ after filling the form
  • Upload documents and finally submit the form
  • After final submission, get the application ID and a password

Step 4: He/she needs to convince the bank to provide a loan for the project.

Step 5: Bank provides a communication letter that needs to be submitted in the interview.

Step 6: Nodal agency KVIC/DIC/KVIB will conduct the interview process.

Step 7: If the project is selected, it will get forwarded to the bank.

Step 8: He/she needs to submit all the required documents to the bank proposed by the nodal agency. 

Step 9: Bank will process the application, and they will inspect the place where the project will be initiated. 

Step 10: Bank will sanction the loan, and the sanction letter is submitted to KVIC/KVIB/DIC.

Step 11: He/she gets EDP training.

Step 12: He/she submits the EDP training certificate to KVIC/KVIB/DIC and bank.

Step 13: The government will send the subsidy to the individual’s bank account.

What documents are required to apply for PMEGP loan?

The following documents are required to apply for the PMEGP loan

  • Aadhar card
  • PAN card
  • Caste certificate by the eligible authority
  • Special category certificate (if required)
  • Rural area certificate
  • Education certificate
  • Skill development training certificate
  • EDP certificate
  • Authorization letter

What are PMEGP loan details?

  • Interest rates for PMEGP loan are around 11% to 12%.
  • The tenure of the loan will be from 3 yrs to 7 yrs after the preliminary moratorium that does not exceed 6 months
  • Bank sanctions the funding of up to 90% to 95% of the project cost
    • The government gives 15 % to 35% as margin money or subsidy
    • The bank gives the remaining 60% to 75% as a term loan
  • The margin money or subsidy is locked in for a period of 3 yrs
  • At least once in 3 yrs after the margin money is locked, it is required that the working capital expenditure be equal to the cash credit limit. The utilization of the sanctioned limit should not be less than 75%.

What are the positive and negative list of enterprises for PMEGP loan?

Positive ListNegative List
  • Forest-based Products
  • Agro-Based Processing Industry
  • Mineral-Based Products
  • Polymer-Based Products
  • Chemical-Based Products
  • Fibre and Hand Made Paper
  • Biotech and Rural Engineering
  • Textile and Service
  • Production and Processing of meat or intoxicant items like Beedi/Pan/Cigar/Cigarette, etc.
  • Cultivation, Horticulture, Floriculture and Sericulture Business
  • Manufacture of Polythene carry bags of less than 20 microns
  • Recycled Plastic Container
  • Rural Transport (Auto RIckshaw, Houseboat, Tourist boat in Andaman and Nicobar Islands and Shikara, Tourist boats in Jammu & Kashmir and Cycle Rickshaw is the exception)
  • Industries such as Processing of Pashmina Wool

How to reject PMEGP loan?

PMEGP loan is rejected due to the following reasons:

  • Inability to deposit own contribution
  • Lack of proper knowledge in the proposed industry
  • If the person applying for a loan is a government employee
  • Activity in the industry that is in the negative list
  • Improper filling of the application

What is the difference between PMEGP loan vs Mudra loan?

  • PMEGP loan is focussed towards manufacturing and service units, whereas Mudra loan is concentrated only on Micro units development(which is up to Rs 10 lac).
  • PMEGP is divided into General/ST/SC/OBC caste category while Mudra loan is divided into Shishu, Kishor and Tarun business category not on the caste category
  • The banks that are included in PMEGP are 27 Public Sector Banks, Regional Rural Banks & Co-operative Banks, whereas, for Mudra Bank, all commercial banks in the public & private sector and Co-operative Banks are included.

How To Apply For Mudra Loan?

PMEGP loan comes across as a welcome opportunity for the youth to start an enterprise and generate employment for the majority of unemployed people in the country. It is an excellent chance for both the educated and non-educated to become self-reliant and less dependent on others and foreign investment to kick start their working career. 

This programme will not only benefit youth in urban areas but also in rural areas, and it will generate employment opportunities in the village so that the people do not migrate for better job opportunities to the urban areas. It will directly result in the prosperity of their region and mitigates the struggle to a large extent.