PMEGP Explained: Government Subsidy for New Micro-Enterprises

PMEGP (Prime Minister's Employment Generation Programme) is a credit-linked subsidy scheme run by the Ministry of MSME through the Khadi and Village Industries Commission (KVIC). Unlike a standard loan, part of the funding comes as a government subsidy that doesn't need to be repaid — provided the business runs successfully through a lock-in period.

How much you can get

The maximum project cost eligible for PMEGP support is ₹50 lakh for manufacturing units and ₹20 lakh for service or trading businesses. Within that project cost, the government subsidy (called margin money) ranges from 15% to 35% of the project cost, depending on your category and whether your business is in a rural or urban area — general category applicants in urban areas typically receive the lower end, while women, SC/ST, and other special categories in rural areas receive the higher end.

Important: it's for new businesses only

PMEGP is specifically for setting up new micro-enterprises — it is not available for expanding or upgrading an existing business, and applicants who have already received a subsidy under a similar government scheme are not eligible.

Who can apply

• Individuals aged 18 or above
• For manufacturing projects above ₹10 lakh or service projects above ₹5 lakh, the applicant must have passed at least 8th standard
• No specific income ceiling for applicants
• Self-help groups, charitable trusts, and registered cooperative societies are also eligible

How the funding actually works

You contribute a small portion yourself (typically 5-10% of the project cost), the government subsidy covers 15-35%, and the remaining balance is provided by a bank as a term loan. Most PMEGP-backed loans are also covered under CGTMSE, which means collateral is generally not required, subject to the bank's own policy.