Government of India launched the Prime Minister’s Employment Generation Programme (PMEGP) in 2008. The PMEGP scheme is a credit-linked subsidy scheme and was introduced by merging two schemes that were in operation until 31 March 2008, namely Prime Minister’s Rojgar Yojana (PMRY) and Rural Employment Generation Programme (REGP).

PMEGP is a central government scheme being administered by the Ministry of Micro, Small and Medium Enterprises (MoMSME). It is being implemented by the Khadi and Village Industries Commission (KVIC), along with State KVIC Directorates, KVIBs, and District Industries Centres (DICs).

What is the PMEGP loan scheme?

PMEGP is a credit-linked subsidy programme that aims to generate employment opportunities through the establishment of micro and small businesses in the non-farm sector across rural and urban areas. It focuses on bringing together widely dispersed traditional artisans and rural and urban unemployed youth to provide self-employment opportunities.

With the PMEGP loan scheme, the government aims to reduce migration of rural youth to urban areas and promote socio-economic development in backward regions. Under PMEGP, beneficiaries can get project cost subsidies ranging from 15% to 35%, enabling MSMEs, small businesses, and entrepreneurs to avail credit to initiate and grow their ventures.

Who are the beneficiaries of PMEGP?

Let’s understand who can apply for PMEGP scheme. The beneficiaries of PMEGP scheme includes:

• Any individual (Indian) over 18 years of age
• Education level – At least VIII standard qualified (for setting up projects above ₹10 lakhs in the manufacturing sector and ₹5 lakhs in the services/business sector)
• Only applicable to new projects
• Self Help Groups (SHG)*, institutions registered under Societies Registration Act, 1860; Production Co-operatives Societies, Charitable Trusts are also eligible (*T&C apply)

Maximum project cost – Up to ₹1 crore in the manufacturing sector and ₹50 lakhs in the services sector.

The PMEGP scheme aims to offer a subsidy for two activities:

• Setting up of new micro enterprises
• Upgradation/expansion through a second loan for existing PMEGP/MUDRA units (as per scheme guidelines).

The government will extend a subsidy to beneficiaries for these two activities. The subsidy will be a percentage of the total project cost. The remaining amount can be taken from banks authorised by KVIC for the PMEGP scheme as term loans.

How much is PMEGP subsidy?

The PMEGP scheme is structured in a way that the individual/applicant has to furnish 5% – 10% of the project cost on their own, and the remaining amount can be availed through banks approved under the scheme.

• Maximum project cost for manufacturing: Up to ₹1 crore
• Maximum project cost for services: Up to ₹50 lakhs

For 2nd loan upgrade projects (e.g., upgrade for MUDRA loan scheme), subsidy is provided as a percentage of the project cost (as per PMEGP guidelines), with project limits up to ₹1 crore for manufacturing and ₹50 lakhs for services.

Categories of beneficiaries and rates of subsidy:

Setting up of micro enterprises

Categories of beneficiaries under PMEGP	Beneficiary’s contribution (of project cost)	Rate of Subsidy (of project cost)		Term loan
Area (location of project/unit)		Urban	Rural
General Category	10%	15%	25%	The balance amount of the total project cost will be provided by banks as term loans.
Special Category*	5%	25%	35%

* Special category includes SC, ST, OBC, minorities, women, ex-servicemen, transgenders, differently abled, NER, aspirational districts, hill and border areas (as notified by the Government), etc.

Upgrading existing PMEFGP/REGP/MUDRA units

Categories of beneficiaries under PMEGP	Beneficiary’s contribution (of project cost)	Rate of Subsidy (of project cost)
All categories	10%	15% (20% in NER and Hill States)

The maximum cost of the projects under manufacturing sector for upgradation should be ₹1 Crore and the maximum subsidy would be ₹15 lakh (₹20 lakh for NER and Hill States). The maximum cost of the projects under the services sector for upgrading existing units should be ₹50 lakh and the maximum subsidy would be as per applicable subsidy percentage of project cost (instead of fixed ₹3.75 lakh/₹5 lakh limits).

(Source: //msme.gov.in/1-prime-ministers-employment-generation-programme-pmegp)

Also read: CETPs MSME scheme – Benefits, guidelines, documents, eligibility

PMEGP loan limit

The maximum loan limit for PMEGP scheme is up to 90% – 95% of project cost.

The maximum project cost is ₹1 crore for manufacturing and ₹50 lakhs for services. The components of project cost includes:

Capital expenditure loan (term loan), working capital and 10% of project cost as own contribution (General category) and 5% contribution (for special category)

For example, for a ₹1 crore project cost, the break down will look like:

10% individual contribution: ₹10 lakhs
70% bank finance in the form of term loan and working capital: ₹70 lakhs
20% PMEGP loan subsidy (margin money): ₹20 lakhs

What is the PMEGP loan scheme interest rate?

The PMEGP loan scheme interest rate varies between lenders. In general it ranges between ~9% to 12% (depending on bank/MCLR and applicant profile)

Is collateral required for PMEGP scheme?

As per RBI guidelines, projects costing up to ₹10 lakhs generally do not require collateral and are covered under CGTMSE under the PMEGP scheme. For projects above ₹10 lakhs, specific lenders might require collateral.

There’s also coverage under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme. Ensure to check these details with your lender.

Eligibility for PMEGP scheme

The PMEGP scheme eligibility criteria are different for individuals planning to set up a new enterprise and units seeking to upgrade their existing PMEGP/REGP/MUDRA units.

Eligibility for setting up new units

• Individuals should be above 18 years of age.
• For setting up of projects costing above ₹10 lakh in the manufacturing sector and above ₹5 lakh in the service sector, the beneficiaries should possess at least VIII standard pass educational qualification.
• Projects without capital expenditure are not eligible for PMEGP loan scheme.
• Only one person from one family is eligible for subsidy for setting up of projects under PMEGP. ‘Family’ includes self and spouse.

Eligibility for upgrading existing PMEFGP/REGP/MUDRA units

• The subsidy under PMEGP scheme that has been claimed by a unit must be successfully adjusted after completing 3 years (lock in period).
• First loan under PMEGP/REGP/MUDRA must be successfully repaid within the stipulated time.
• The unit must be profit making with good turnover and have potential for further growth in terms of turnover and profit with modernisation/upgrading the technology.

Businesses covered under PMEGP

The employment generation scheme is for new micro business units only. Some of the business ventures admissible under the PMEGP scheme are:

• Trading activities in the form of sales outlets.
• Retail outlets selling Khadi products, Village Industry products procured from Khadi and Village Industry Institutions certified by KVIC.
• Retail outlets/business selling products manufactured by PMEGP units and clusters set up under the SFURTI scheme.
• Retail outlets backed by manufacturing (including processing)/service facilities.
• Transport activities viz purchase of Cab/Boat/Motorboat/Shikara etc., for transportation of tourists or public (subject to current PMEGP guidelines and state-wise approvals).

Activities/businesses not eligible for PMEGP scheme

There is a negative list of activities that are not permitted according to the PMEGP scheme guidelines.

• Processing, canning and/or serving items made of meat.
• Manufacturing or sale of intoxicant items like beedi/pan/ cigar/cigarette.
• Sales outlet serving liquor.
• Activities prohibited by local government/authorities keeping in view environment or socio-economic factors.
• Manufacturing of polythene carry bags of less than 120 microns thickness (as per updated plastic waste rules) and manufacture of carry bags or containers made of recycled plastic for storing, carrying, dispensing or packaging of food stuff and any other item which causes environmental problems.
• Any industry/business connected with the cultivation of crops or plantations like tea, coffee, rubber etc. sericulture (cocoon rearing), horticulture, and floriculture.

Documents required for PMEGP scheme

Given below are the documents required to apply for the PMEGP scheme:

• Highest educational qualification certificate
• Project report summary/detailed project report  
• Social/S\special category certificate, if applicable
• Rural area certificate, if applicable
• Aadhaar card and PAN card (basic KYC documents)
• Bank account details/passbook copy

How to apply for PMEGP scheme

PMEGP scheme has a specific online portal hosted by the KVIC for inviting project applications from entrepreneurs. There are separate options for applying for new units and upgrading existing ones. Applying for PMEGP scheme includes four steps:

Step 1: Visit PMEGP portal: www.kviconline.gov.in/pmegpeportal

Step 2: Click on ‘Application for new unit’ or ‘Application for existing unit’

Step 3: Fill in the application form

Step 4: Click on ‘Save applicant data’

Step 5: Upload required documents

Step 6: Click on ‘Final submission to sponsoring agency’

Do note that the details filled in on the application cannot be modified once it is submitted.

PMEGP application status check (2026)

Applicants can track their PMEGP application status online through the official KVIC portal. Follow these simple steps:

Step 1: Visit the PMEGP e-portal (KVIC website)
Step 2: Click on “Track Application Status”
Step 3: Enter your application ID or registered mobile number
Step 4: Click on submit to view your application status
Step 5: Check real-time updates on approval, bank processing, or rejection status

This helps applicants stay informed, take timely action, and improves transparency in the PMEGP application process.

PMEGP loan rejection reasons and approval tips (2026)

Understanding common rejection reasons and how to avoid them can significantly improve your chances of getting a PMEGP loan approved.

Common reasons for PMEGP loan rejection	Tips to get PMEGP loan approved faster
Incomplete or incorrect application form	Ensure all details are accurate and double-check before submission
Weak or unrealistic project report	Prepare a strong, detailed, and realistic DPR (project report).
Low CIBIL score or poor credit history	Maintain a good credit score (700+) before applying
Lack of proper documentation	Submit complete and verified documents as per guidelines
Ineligible business activity under PMEGP	Choose eligible and viable business activities under the scheme
Bank viability concerns	Select a feasible project with clear profitability and demand
	Follow up regularly with the bank/KVIC office
	Apply under the correct category (general/special)

 Banks offering PMEGP loans

There are several public sector banks, Regional Rural Banks (RRBs), private banks, and cooperative banks empanelled under PMEGP from where you can avail PMEGP loans for your enterprises. Here are some of the notable names you can consider:

Public sector undertaking banks:

• Bank of Baroda
• Bank of India
• Canara Bank
• Punjab National Bank
• Union Bank of India
• Indian Overseas Bank

Regional rural banks:

• Andhra Pradesh Grameena Vikas Bank
• Arunachal Pradesh Rural Bank
• Baroda Gujarat Gramin Bank
• Chhattisgarh Rajya Gramin Bank
• Karnataka Gramin Bank
• Saurashtra Gramin Bank

Private sector banks:

• HDFC Bank
• Axis Bank
• ICICI Bank
• Federal Bank
• IDFC First Bank
• Karur Vysya Bank

Cooperative banks:

• Jharkhand State Co-Op Bank
• The Andhra Pradesh State Co-Operative Bank Ltd.
• NKGSB Co-operative Bank
• The Ajara Urban Co-Op. Bank Ltd

Conclusion

For more details, visit the official KVIC PMEGP portal to check the updated list of empanelled banks to avail PMEGP loan subsidy.

There other government loan schemes, like PSB Loan in 59 minutes, CLCSS scheme, Stand-up India scheme, etc., that MSMEs and entrepreneurs can explore for getting the necessary financing from the government. Participating in government schemes can also improve your business goodwill and pave the way to getting selected for more government schemes in the future.

*For information only. All are advised to visit the official websites of KVIC and PMEGP and the respective lending banks for more details and clarity.

FAQs

What is PMEGP scheme?

PMEGP is a government credit-linked subsidy scheme to support micro businesses in India. 

What is PMEGP full form?

PMEGP stands for Prime Minister’s Employment Generation Programme. 

What is the maximum loan under PMEGP?

Up to ₹1 crore for manufacturing and ₹50 lakhs for services. 

What is PMEGP subsidy rate?

Subsidy ranges from 15% to 35% based on category and location. 

Who is eligible for PMEGP?

Any Indian above 18 years with a viable business project can apply. 

Is collateral required for PMEGP loan?

No collateral is required for loans up to ₹10 lakhs under CGTMSE coverage. 

What is the interest rate for PMEGP loan?

Interest rates generally range between ~9% to 12%, depending on the bank. 

Can I apply for PMEGP online?

Yes, applications can be submitted through the KVIC PMEGP portal. 

What businesses are allowed under PMEGP?

Manufacturing, service, retail, and certain transport-related activities are allowed. 

How long does PMEGP approval take?

It typically takes a few weeks to a few months, depending on bank processing and verification.