How to use Prime Minister's Employment Generation Programme to fund your small business

PMEGP is a credit-linked subsidy programme that empowers people to start their own business and create jobs. Here's how to avail it.

22nd Aug 2019
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Till 2008, the Government of India implemented the Prime Minister's Rojgar Yojana (PMRY) and Rural Employment Generation Programme (REGP) to boost employment by establishing micro enterprises. The two schemes were merged and named the Prime Minister's Employment Generation Programme (PMEGP).


The PMEGP scheme is a credit-linked subsidy programme aimed at generating self-employment opportunities by following an approach similar to PMRY and REGP; this central sector scheme looks to empower people to establish their own business and create jobs.


Here's everything you need to know about PMEGP and how entrepreneurs/small businesses can avail its benefits.


More about PMEGP


Through setting up small businesses, the scheme aims to generate a steady stream of employment opportunities in various areas of the country. Another objective is facilitating financial institutions to lend more to the micro sector.


PMEGP is administered by the Ministry of Micro, Small and Medium Enterprises (MoMSME) and implemented by the Khadi and Village Industries Commission (KVIC), which functions as the nodal agency at the national level. At the state level, PMEGP is implemented through State KVIC Directorates, State Khadi and Village Industries Boards (KVIBs), District Industries Centres (DICs) and banks.


Nitin Gadkari, Union Minister for MSME, recently presented data revealing that PMEGP created 5.87 lakh micro enterprise jobs in 2018-19, against the target of 5.79 lakh jobs.


The most jobs were created in Jammu and Kashmir (60,232), Maharashtra (45,136), Uttar Pradesh (41,944), and Tamil Nadu (41,480).


Gadkari added that under PMEGP, the employment generated during the years 2014-15, 2015-16, 2016-17, and 2017-18 was 3.58 lakh, 3.23 lakh, 4.08 lakh, and 3.87 lakh, respectively.


A second dose of financial assistance has also been allowed under the scheme for expansion/upgrading existing PMEGP/MUDRA units. The financial assistance provided is to the tune of upto Rs 1 crore for manufacturing units, and upto Rs 25 lakh for service units. There is also a subsidy of 15 percent for non-NER (North Eastern Region) and 20 percent for NER and hilly states.


Eligibility and rate of subsidy


Any individual, above 18 years of age, can avail the scheme. Further, the person should be at least an eighth standard pass for projects costing above Rs 10 lakh in the manufacturing sector and above Rs 5 lakh in the business/service sector.


Further, the project should be new, and self help groups (including those belonging to BPL provided that they have not availed benefits under any other scheme), institutions registered under Societies Registration Act of 1860, production co-operative societies, and charitable trusts are also eligible. 


Existing Units (under PMRY, REGP or any other scheme of Government of India or State Government) and the units that have already availed subsidy under any other scheme of Government of India or State Government are not eligible.


The maximum cost of the project/unit admissible in the manufacturing sector is Rs 25 lakh and in the business/service sector, it is Rs 10 lakh.


The rate of subsidy (in percentage of project cost) in general category is 15 percent in urban areas and 25 percent in rural areas. In special categories such as SC/ST/OBC/minorities/women, ex-servicemen, physically handicapped, NER, hill, and border areas, the rate is 25 percent in urban areas and 35 percent in rural areas.


The balance amount of the total project cost is provided by banks in the form of term loan and working capital.


How to apply


The State/Divisional Directors of KVIC, in consultation with KVIB and Director of Industries of respective states (for DICs) give advertisements locally through print and electronic media inviting applications along with project proposals from prospective beneficiaries desirous of establishing the enterprise/starting of service units under PMEGP.


The beneficiaries can also submit their application online at https://www.kviconline.gov.in/pmegpeportal/pmegphome/index.jsp and take the printout of the application and submit it to the respective offices along with a detailed project report and other required documents.


Whom to contact:

State Director, KVIC

Address available at http://www.kviconline.gov.in

Dy. CEO (PMEGP), KVIC, Mumbai

Ph: 022-26711017

Email: ykbaramatikar.kvic@gov.in


Click here for more information on the scheme.

Click here for guidelines for the second round of financial assistance for expansion of existing and successful PMEGP/MUDRA units



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