For many aspiring entrepreneurs in India, the biggest hurdle isn’t a lack of ideas—it’s a lack of capital. The Prime Minister’s Employment Generation Programme (PMEGP Scheme) is a flagship credit-linked subsidy scheme designed specifically to bridge this gap.
Administered by the Ministry of MSME, this scheme is a powerful tool for individuals, SHGs, and cooperative societies to set up new micro-enterprises in both rural and urban areas. Whether you’re looking to start a small manufacturing unit or a service-based business, here is everything you need to know about the PMEGP scheme in 2026.
What is the PMEGP Scheme?
The PMEGP Scheme is a credit-linked subsidy program launched by the Ministry of Micro, Small and Medium Enterprises (MSME). It is implemented through KVIC (Khadi and Village Industries Commission), State Khadi and Village Industries Boards (KVIBs), and District Industries Centres (DICs).
The main objective of PMEGP is to:
- Generate employment opportunities
- Encourage first-time entrepreneurs
- Promote micro-enterprises in rural and urban areas
- Strengthen the MSME ecosystem
Under this scheme, eligible entrepreneurs receive a bank loan along with a government subsidy, reducing their financial burden significantly
PMEGP Scheme: Quick Answers
- PMEGP is best for: First-time entrepreneurs & unemployed youth
- Loan + Subsidy: Bank loan with 15%–35% government subsidy
- Maximum project cost: ₹50 lakh (manufacturing), ₹20 lakh (services)
- Business type: Only new enterprises
- Best suited for: Rural MSMEs, women entrepreneurs, artisans
Key Highlights of the PMEGP Scheme
The PMEGP scheme is more than just a loan; it is a financial cushion that reduces the burden of debt on a new business.
- Manufacturing Sector: Projects up to ₹50 Lakhs.
- Service/Trading Sector: Projects up to ₹20 Lakhs.
- Subsidy (Margin Money): Between 15% to 35% of the project cost.
- Own Contribution: Only 5% to 10% of the project cost is required from the entrepreneur.
Eligibility Criteria for PMEGP Scheme
To ensure genuine entrepreneurship, the scheme has clear eligibility rules:
- Applicant must be 18 years or above
- Only new enterprises are eligible (existing units cannot apply)
- For projects above ₹10 lakh (manufacturing) or ₹5 lakh (service), minimum 8th pass is required
- Self-help groups, societies, trusts (with conditions) are also eligible
- The unit must qualify as a micro-enterprise under MSME norms
Educational Qualification
- For projects above ₹10 lakh (manufacturing) and ₹5 lakh (service), minimum 8th standard pass is required.
Who is Not Eligible?
- Existing units that have already availed government subsidy
- Projects under PMEGP for business expansion
- Individuals who have previously taken benefits under similar subsidy schemes
How MSMEs Can Apply for PMEGP Scheme Online
The PMEGP application process is completely online and MSME-friendly:
Step-by-Step Application Process
- Visit the official PMEGP portal
- Select “New Entrepreneur” option
- Fill in personal, educational, and business details
- Upload required documents
- Choose preferred bank and location
- Submit the application
After submission:
- Application is verified by KVIC/DIC
- Bank evaluates project viability
- Loan is sanctioned
- Mandatory Entrepreneurship Development Programme (EDP) training
- Loan is disbursed and subsidy is released
Documents Required for PMEGP Application
- Aadhaar card
- PAN card
- Educational qualification certificate
- Caste certificate (if applicable)
- Project report
- Bank account details
- Passport-size photograph
A well-prepared project report significantly improves approval chances.
Key Features of the PMEGP Scheme
1. Loan Amount
- Manufacturing sector: Up to ₹50 lakh
- Service sector: Up to ₹20 lakh
2. Subsidy (Margin Money): The subsidy depends on the applicant category and location.
| Category | Urban Area | Rural Area |
|---|---|---|
| General Category | 15% | 25% |
| SC/ST/OBC/Women/Minorities/PH | 25% | 35% |
The subsidy is adjusted against the loan amount after successful implementation of the project.
3. Own Contribution Required: Entrepreneurs must contribute a small portion of the project cost:
- General Category: 10%
- Special Category: 5%
The remaining amount is financed by banks as a term loan.
Benefits of PMEGP Scheme for MSMEs
- Lower startup cost due to subsidy
- Easy access to institutional finance
- Government-backed credibility
- Employment generation at local level
- Support for inclusive entrepreneurship
PMEGP especially empowers women entrepreneurs, rural youth, and first-time business owners.
Types of Activities Covered Under PMEGP
PMEGP supports a wide range of business activities, including:
Manufacturing Sector
- Food processing units
- Handloom and handicrafts
- Garment manufacturing
- Agro-based industries
- Engineering and fabrication units
Service Sector
- Beauty salons and wellness centres
- Repair and maintenance services
- IT and digital services
- Transport and logistics
- Educational and training institutes
PMEGP vs Other MSME Schemes
PMEGP stands out because:
- It focuses on new enterprises, not expansion
- Provides higher subsidy compared to many other schemes
- Covers both manufacturing and service sectors
- Especially beneficial for rural MSMEs and women entrepreneurs
PMEGP Scheme FAQs
Here are answers to the most common questions people ask about the PMEGP scheme.
What is PMEGP scheme in simple words?
PMEGP is a government scheme that helps people start a new small business by providing a bank loan along with government subsidy to reduce the financial burden.
Who can apply for PMEGP loan in India?
Any Indian citizen above 18 years of age can apply for PMEGP. The scheme is mainly for unemployed youth, women entrepreneurs, artisans, and first-time business owners.\
How much loan can I get under PMEGP?
Under PMEGP, you can get a loan for a project cost of up to ₹50 lakh for manufacturing businesses and up to ₹20 lakh for service sector businesses.
How much subsidy does PMEGP provide?
PMEGP provides subsidy ranging from 15% to 35%. The exact subsidy depends on your category and whether your business is in a rural or urban area.
Is PMEGP loan available without collateral?
In most cases, PMEGP loans up to ₹10 lakh are covered under the Credit Guarantee Fund, so collateral security is usually not required. Final decision depends on the bank.
Can I apply for PMEGP for an existing business?
No, PMEGP is only for starting a new business. Existing businesses or expansion projects are not eligible under this scheme.
How much money do I need to invest myself in PMEGP?
If you belong to the general category, you need to invest 10% of the project cost. For women, SC, ST, OBC, and minority categories, the required contribution is only 5%.
Which businesses are allowed under PMEGP?
PMEGP supports manufacturing units, service-based businesses, and selected trading activities such as food processing, tailoring, repair services, beauty salons, and digital services.
How do I apply for PMEGP online?
You can apply online through the official PMEGP portal by registering, filling in your project details, uploading documents, and submitting the application.
Is training compulsory under PMEGP scheme?
Yes, Entrepreneurship Development Programme training is compulsory for PMEGP beneficiaries before the loan and subsidy are released.
Which bank gives PMEGP loan?
PMEGP loans are provided by government banks, private banks, regional rural banks, and cooperative banks that are linked with the PMEGP scheme.
Check more Central Government Scheme
This article is written for MSMEs and aspiring entrepreneurs to simplify government schemes and support informed business decisions