The Prime Minister’s Employment Generation Programme (PMEGP) is one of India’s most important government schemes for people who want to start their own business. It provides financial assistance and subsidy to unemployed youth, women, and small entrepreneurs to set up new enterprises in both rural and urban areas.
If you are planning to start a small business but lack money, this guide explains the PMEGP scheme in simple language.
What Is PMEGP Scheme?
PMEGP is a credit-linked subsidy scheme launched by the Government of India to generate employment by supporting micro-enterprises. It is implemented through:
KVIC (Khadi and Village Industries Commission)
DIC (District Industries Centre)
KVIB (Khadi and Village Industries Board)
The scheme encourages people to become job creators instead of job seekers.
Who Can Apply for PMEGP?
The scheme is open to:
Self-help groups (SHGs)
People above 18 years of age
For projects above ₹10 lakh (manufacturing) or ₹5 lakh (service), applicants should have at least 8th pass qualification.
Businesses Covered Under PMEGP
You can start many types of businesses, such as:
Manufacturing units
Food processing
Dairy and poultry
Repair workshops
Cyber cafés
Service centers
Small industries
Agriculture farming alone is not covered, but allied activities like food processing are allowed.
Loan Amount Under PMEGP
Maximum Project Cost
Sector
Manufacturing
₹25 lakh
₹10 lakh
The bank provides a loan for most of the project cost, while the government provides subsidy.
Subsidy Under PMEGP
The best part of PMEGP is the subsidy (called margin money).
Category
General
15%
25%
Special Category (SC/ST/Women/OBC/Minority/Ex-servicemen/PH)
25%
35%
This subsidy reduces your repayment burden.
Step-by-Step Process to Apply for PMEGP
Step 1: Select Business Idea
Choose a viable business that has demand in your area.
Step 2: Prepare Project Report
Include:
Business type
Cost details
Machinery required
Expected income
Employment generation
A clear report increases approval chances.
Step 3: Online Application
Apply through the official PMEGP portal. Fill in personal, educational, and business details.
Step 4: Document Submission
Upload required documents:
Educational certificate
Caste certificate (if applicable)
Step 5: Scrutiny by DIC/KVIC
Officials verify your application and may call for an interview.
Step 6: Forwarding to Bank
If approved, your application goes to a bank for loan processing.
Step 7: Bank Verification
The bank checks:
Project viability
Credit history
Field inspection
Step 8: Loan Sanction
If satisfied, the bank sanctions the loan.
Step 9: EDP Training
You must attend a short Entrepreneurship Development Program (EDP) training.
Step 10: Subsidy Release
After the business starts, subsidy is credited and adjusted in loan account.
Documents Required
Aadhaar Card
PAN Card
Passport size photos
Project report
Educational qualification proof
Caste certificate (if needed)
Benefits of PMEGP Scheme
High subsidy support
Encourages self-employment
No need for large personal investment
Promotes rural industries
Generates local employment
Important Tips for Approval
✔ Choose realistic project cost
✔ Submit correct documents
✔ Maintain good CIBIL score
✔ Attend training seriously
✔ Use funds only for business
Common Reasons for Rejection
Incomplete application
Weak project report
Poor credit history
Lack of business knowledge
Prepare properly to avoid these issues.
Conclusion
PMEGP is a golden opportunity for unemployed youth and rural entrepreneurs who want to start a small business. With government subsidy and bank loan support, starting an enterprise becomes easier and less risky.
If you have a strong business idea and follow the proper process, PMEGP can help you become financially independent and even create jobs for others.
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