The Prime Minister’s Employment Generation Programme (PMEGP) is a flagship credit-linked subsidy scheme of the Government of India aimed at generating self-employment opportunities through establishment of micro-enterprises in the non-farm sector. PMEGP is implemented by KVIC (Khadi and Village Industries Commission) at the national level, and by KVIBs / DICs at the state and district levels.
In PMEGP 2025, the scheme continues to be one of the most popular options for first-time entrepreneurs, startups, and MSMEs looking for subsidy + bank loan support.
PMEGP is a credit-linked subsidy scheme, not a grant. Under this scheme:
The entrepreneur contributes a small margin
The bank provides a term loan + working capital
The government provides a subsidy (25%–35%), which is adjusted in the loan account
The main objective is to promote new self-employment ventures in manufacturing, service, and business activities.
Maximum project cost: ?50 lakh
Includes production, processing, and manufacturing units
Maximum project cost: ?20 lakh
Includes service-based and trading activities
| Category | Urban Area | Rural Area |
|---|---|---|
| General Category | 15% | 25% |
| SC / ST / OBC / Women / Minority / Ex-Servicemen / PH | 25% | 35% |
The subsidy is kept as Margin Money (MM) and adjusted after 3 years if the unit is successfully running.
Applicant must be Indian citizen
Minimum age: 18 years
Only new projects are eligible (no existing units)
Applicant should not have availed PMEGP earlier
For projects above ?10 lakh (manufacturing) and ?5 lakh (service):
Minimum 8th pass qualification required
SHGs, Trusts, Societies, and Co-operative Societies are also eligible (subject to conditions)
Aadhaar Card
PAN Card
Passport size photographs
Caste certificate (if applicable)
Educational qualification certificate (if required)
Project Report
Bank account details
Special category proof (Women / Minority / Ex-servicemen etc.)
Own Contribution: 5%–10% of project cost
Bank Loan: Remaining amount after subsidy
Collateral: Generally not required up to ?10 lakh (CGTMSE cover applicable)
Subsidy up to 35%
Loan up to ?50 lakh (manufacturing)
No collateral for small loans
Covers manufacturing & service sectors
Government-backed scheme
Encourages self-employment & entrepreneurship
| Merits | Demerits |
| High subsidy (up to 35%) | Lengthy approval process |
| Low own contribution | Limited activities allowed |
| Suitable for first-time entrepreneurs | Strict monitoring for 3 years |
| Government-supported scheme | Subsidy adjusted after lock-in |
| Promotes rural employment | Bank discretion in approval |
Online application on KVIC PMEGP portal
Submission of project report & documents
Bank appraisal & interview
Loan sanction
Subsidy release after unit setup
No. It is a credit-linked subsidy, adjusted in the loan after 3 years.
Yes, generally loans up to ?10 lakh do not require collateral.
No. Only new units are eligible.
Up to ?50 lakh for manufacturing and ?20 lakh for service/business activities.
Normally 2–4 months, depending on bank and district authorities.
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