Prime Minister's Employment Generation Programme (PMEGP): Eligibility, Features & Training

The Prime Minister’s Employment Generation Programme (PMEGP) is a credit-linked subsidy scheme launched by the Government of India in 2008. It is a merger of the Prime Minister’s Rojgar Yojna (PMRY) and the Rural Employment Generation Programme (REGP). The primary goal of PMEGP is to create self-employment opportunities by assisting unemployed youth and traditional artisans in setting up micro-enterprises in the non-farm sector.

The Ministry of MSME oversees the PMEGP scheme, with the Khadi and Village Industries Commission (KVIC) acting as the national-level implementing agency. At the state level, it is executed through:

• State KVIC Directorates
• State Khadi and Village Industries Boards (KVIBs)
• District Industries Centres (DICs)
• Banks

Objectives of PMEGP

• Generate self-employment opportunities in urban and rural areas
• Support unemployed youth and artisans in setting up micro-enterprises
• Encourage financial institutions to provide higher credit flow to the micro sector

Who is Eligible?

• Individuals aged 18 years or above
• Minimum education qualification: Class 8 pass is required for projects above ?5 lakh (service sector) and ?10 lakh (manufacturing sector)
• Institutions registered under the Societies Registration Act, 1860
• Production-based cooperative societies
• Self-Help Groups (SHGs) and charitable trusts

Key Features of PMEGP

• Implemented through KVIC, KVIBs, DICs, and banks in a 30:30:40 ratio
• Only new businesses are eligible; existing units and those availing any government subsidy (State or Central) cannot apply
• No income limit for project eligibility
• Industry coverage includes all types (including coir-based projects) except those in the negative list
• Investment Limits: 
  • Plain areas: ?1 lakh per capita
  • Hilly areas: ?1.5 lakh per capita
  • Maximum project cost: 
    • ?10 lakh (Service sector)
    • ?25 lakh (Manufacturing sector)

Areas Covered

• Rural areas (as per the KVIC Act, 2006): Includes villages and towns with a population of up to 20,000
• Urban areas: Only projects under District Industries Centres (DICs) qualify

Activities Not Eligible (Negative List)

• Businesses related to meat processing, tobacco products (pan, beedi, cigarette, etc.)
• Sericulture, cultivation, floriculture, and horticulture-based industries
• Plastic recycling units producing containers or polythene bags below 20 microns
• Pashmina wool processing (if it involves hand spinning and hand weaving under Khadi Certification Rules)
• Transport services (except houseboats, shikaras, tourist boats, auto-rickshaws in select regions)

Financial Assistance & Subsidy Structure

Margin Money Contribution:

• 5% of project cost (for Special Category)
• 10% of project cost (for General Category)

Example: If Miss Nishitha applies for an ?8 lakh loan, her margin contribution will be ?1.6 lakh (20%), and the bank will finance ?6.4 lakh (80%).

 

Subsidy Rates:

Category Own Contribution Subsidy (Urban) Subsidy (Rural) General 10% 15% 25% Special (SC/ST/OBC/Minorities/Women, Ex-Servicemen, Differently-Abled, NER, Hilly & Border Areas) 5% 25% 35%

Example: If Mr.Ram, a young entrepreneur from Bangalore Urban, applies for a ?10 lakh project:

• He contributes ?1 lakh (10%)
• He receives ?9 lakh from the bank
• Bank withholds 15% margin money (?1.5 lakh), reimbursed by KVIC

Loan & Repayment Terms

Funding Mechanism:

• Banks provide term loans and cash credit for working capital
• Bank financing covers 60-75% of the project cost after deducting margin money and owner’s contribution
• Subsidy is released based on actual capital expenditure; any excess must be refunded

Repayment Schedule:

• Tenure: 3-7 years
• Interest Rate: As per prevailing bank norms

Security:

• No collateral or third-party guarantee required
• Assets created through the loan must be hypothecated to the bank

Mandatory Training for PMEGP Beneficiaries

A two-week entrepreneurship training program is compulsory for all applicants.

How to Apply for PMEGP?

1. Visit the official website: 
   • PMEGP e-Portal
   • MSME Portal
2. Click on "Prime Minister Employment Generation Programme" or “PMEGP e-Portal”
3. Follow the instructions and submit your application

This guide covers all essential details about PMEGP, helping aspiring entrepreneurs understand eligibility, benefits, and the application process. If you're looking to start a business, this government-backed scheme could be the perfect launchpad.