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Government of India launched the Prime Minister’s Employment Generation Programme (PMEGP) in 2008. The PMEGP scheme is a 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).

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PMEGP is a central government scheme being administered by the Ministry of Micro, Small and Medium Enterprises (MoMSME). It is being implemented by Khadi and Village Industries Commission (KVIC).

What is the PMEGP scheme?

PMEGP is a credit linked subsidy programme that aims to generate employment opportunities through the establishment of small businesses in the non-farm sector for rural and urban areas. It focusses on bringing together widely dispersed traditional artisans and rural and urban unemployed youth to give them self-employment opportunities. Government seeks to reduce the migration of rural youth to urban areas with this scheme and bring socio-economic development in backward areas.

What are the benefits of PMEGP scheme

The PMEGP scheme aims to offer a subsidy for two activities – the setting up of new micro enterprises and upgrading existing PMEFGP/REGP/MUDRA units. The government will extend a subsidy for these two activities and this subsidy will only be a percentage of the total project cost. The rest of the amount can be taken from banks authorised by KVIC for the PMEGP scheme as term loans.

Have a look at the PMEGP scheme subsidy offered for these activities:

  1. 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.

The maximum cost of projects under the manufacturing sector should be ₹50 lakh and the maximum cost of the projects under services sector should be ₹20 lakh.

  1. Upgrading existing PMEFGP/REGP/MUDRA units
Categories of beneficiaries under PMEGP Beneficiary’s


(of project cost)

Rate of Subsidy

(of project cost)

All categories 10% 15% (20% in NER and Hill


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 ₹25 Iakh and the maximum subsidy would be ₹3.75 lakh (₹5 lakh for NER and Hill States).


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

Who is eligible 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 PMEFGP/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.
  • Business ventures admissible under the scheme:
  • 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 backed by manufacturing (including processing)/service facilities.
  • Transport activities viz purchase of CabNan/Boat/Motorboat/Shikara etc., for transportation of tourists or public.

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.

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 75 microns thickness and I 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 cultivation of crops/plantation 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 scheme:

  • Highest educational qualification certificate
  • Project report summary/detailed project report
  • Social/Special category certificate, if applicable
  • Rural area certificate if applicable

How to apply to PMEGP scheme?

PMEGP scheme has a specific 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:

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.

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.