PMEGP offers up to ₹50 Lakh with 15-35% government subsidy. Learn the eligibility criteria and complete application process.
The Prime Minister's Employment Generation Programme is a credit-linked subsidy scheme run by KVIC. Unlike a plain term loan, a meaningful slice of the project cost comes back to you as a government margin money subsidy that you never repay — provided the unit survives its three-year lock-in.
Project cost ceilings
- Manufacturing units — up to ₹50 lakh project cost
- Service and trading units — up to ₹20 lakh project cost
Subsidy rates
The margin money subsidy depends on the applicant category and location. General category applicants receive 15% in urban areas and 25% in rural areas. Special category applicants — SC, ST, OBC, minorities, women, ex-servicemen, physically handicapped, and applicants from North Eastern states or hill and border areas — receive 25% in urban areas and 35% in rural areas.
Your own contribution is 10% of project cost for general category and 5% for special category. The balance is a bank term loan.
Eligibility
- Individual applicants must be at least 18 years old
- For projects above ₹10 lakh (manufacturing) or ₹5 lakh (service), a minimum Class VIII pass is required
- Only new units qualify — existing units and units already availing a government subsidy are excluded
- Self Help Groups, registered trusts, societies and production co-operatives are also eligible
Application process
- Register on the PMEGP e-portal at kviconline.gov.in
- Prepare a detailed project report covering machinery, working capital, and projected cash flow
- Submit the online application with the project report and supporting documents
- Application is scored and screened by a District Level Task Force Committee
- On DLTFC approval, the file moves to your chosen bank for appraisal and sanction
- Complete Entrepreneurship Development Programme training — this is mandatory before disbursal
- Bank disburses the loan; KVIC releases the margin money subsidy into a lock-in deposit account
Where applications fail
The project report is the deciding document. Applications rejected at DLTFC stage almost always have unrealistic revenue projections, machinery quotations that do not tie to the cost sheet, or no credible answer on where raw material and customers come from. Get quotations from actual suppliers, keep projections conservative, and make the employment generation figure explicit — that is what the scheme is measured on.
Note the three-year lock-in: the subsidy sits in a term deposit and is only adjusted against your loan after 36 months of the unit operating. Closing the unit early means repaying it.