46 XX | Enlightener Series | D. Central Government Grants | D.4 Prime Minister's Employment Generation Programme

Disclaimer….before you read ahead!

The information contained herein is of a general nature and for information purposes only, with the intent of raising awareness around various resources, schemes etc. available for women entrepreneurs in India. It is not intended to address the circumstances of any particular individual or entity. It does not purport to be all-inclusive or necessarily contain all the information that may be relevant for the reader, and may be subject to updating, revision or amendment. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to remain accurate in the future. The reader, therefore, is required to exercise their discretion; and not act on such information without appropriate professional advice after a thorough examination of the particular situation.

Furthermore, we are not a lender and are not authorized by the Reserve Bank of India to act as one. By disseminating the information contained herein, we are not soliciting any borrower or customers for the company or organization mentioned herein nor do we intend to syndicate any capital for the reader of this article.

About this scheme…

Prime Minister’s Employment Generation Programme (PMEGP), a credit linked subsidy scheme was launched Ministry of Micro, Small & Medium Enterprises (Ministry of MSME), Government of India (GOI) in August 2008 with the aim of:

Generating employment opportunities through the establishment of new Micro-Enterprises or new self-employment ventures or new projects in the non-farm sectors in rural and urban areas
Bringing together widely dispersed traditional artisans, rural and urban unemployed youth and give them self-employment opportunities to the extent possible, at their place
Providing continuous and sustainable employment to a large segment of traditional and prospective artisans and rural and urban unemployed youth in the country, so as to help arrest migration of rural youth to urban areas
Increasing wage-earning capacity of workers and artisans and contribute to an increase in the growth rate of rural and urban employment

This Scheme has been approved for continuation for five years from 2021-22 to 2025-26.

At the National level, this Scheme is being implemented by the Khadi and Village Industries Commission (KVIC), a statutory organization under the administrative control of the Ministry of MSME, as the single nodal agency. You will find their contact details towards the end of this article.

At the State level, this Scheme is implemented through State offices of KVIC, State Khadi and Village Industries Boards (KVIBs), District Industries Centre’s (DICs), Coir Board (for coir-related activities), and Banks. You will find their contact details towards the end of this article.

The Government may also involve other suitable agencies for the implementation of this Scheme.

The Implementing Agencies (IA) at national & state level will associate reputed autonomous institutions in the field of Entrepreneurship Development in Government of India and State Government Self Help Groups (SHGs), National Small Industries Corporation (NSIC), Udyami Mitras empanelled under Rajiv Gandhi Udyami Mitra Yojana (RGUMY), Rural Self Employment Training Institute (RSETIs), Rural Development & Self Employment Training Institute (RUDSETIs), Panchayati Raj institutions and other relevant bodies in the implementation of the scheme, especially in the area of identification of beneficiaries, area specific viable projects, and providing training in entrepreneurship development, handholding and mentoring of beneficiaries.

How is it being implemented?

Under this Scheme, financial assistance in the form of margin money subsidy is given exclusively for,

Setting up new Micro-Enterprises
2nd loan for upgradation of existing PMEGP, Rural Employment Generation Programme (REGP), Micro-Units Development & Refinance Agency Ltd. (MUDRA) units

Margin Money Subsidy implies a non-returnable subsidy/grant towards reducing the Beneficiary’s margin money requirement while availing a loan from a Bank.

Priority will be given to the persons affected by natural calamities or disaster in the areas which are declared as affected by “disaster” as defined under Section 2(d) of the Disaster Management Act, 2005 by the Ministry of Home Affairs.

Higher incentives are given to new Micro-Enterprises set up by Women, SC, ST, OBC, Minorities, Ex-Servicemen, Transgenders, Differently-abled, NER, Aspirational Districts, Hill and Border areas(as notified by the Government) etc.

Please note that the Government subsidy under this Scheme is routed by KVIC through the nodal Bank to the Financing Bank branches & subsequently transferred to the beneficiary account after completion of lock-in period based on the outcome of the physical verification report. For more details, please reach out to KVIC via means mentioned below

What’s on offer?

I. Product

Margin Money Subsidy
Ticket Size where new Micro-Enterprises is being set
- Manufacturing
  - Urban areas: 25% (vis-a-vis 15% for General Category) of Project Cost (upto maximum ₹50 Lakhs). Hence, subsidy of upto ₹12.5 Lakhs can be availed
  - Rural areas: 35% (vis-a-vis 25% for General Category) of Project Cost (upto maximum ₹50 Lakhs). Hence, subsidy of upto ₹17.5 Lakhs can be availed
- Business or Trading or Services
  - Urban areas: 25% (vis-a-vis 15% for General Category) of Project Cost (upto maximum ₹20 Lakhs). Hence, subsidy of upto ₹5 Lakhs can be availed
  - Rural areas: 35% (vis-a-vis 25% for General Category) of Project Cost (upto maximum ₹20 Lakhs). Hence, subsidy of upto ₹7 Lakhs can be availed
Ticket Size for 2nd loan for upgradation of existing PMEGP, REGP, MUDRA units
- Manufacturing
  - All Categories: 15% of Project Cost (upto maximum ₹1 Crore). Hence, subsidy of upto ₹15 Lakhs can be availed
  - NER & Hill States: 20% of Project Cost (upto maximum ₹1 Crore). Hence subsidy of upto ₹20 Lakhs can be availed
- Business or Trading or Services
  - All Categories: 15% of Project Cost (upto maximum ₹25 Lakhs). Hence, subsidy of upto ₹3.75 Lakhs can be availed
  - NER & Hill States: 20% of Project Cost (upto maximum ₹25 Lakhs). Hence, subsidy of upto ₹5 Lakhs can be availed
The balance amount (excluding Beneficiary’s own contribution) of the Total Project Cost will be provided by Banks
If the Total Project Cost exceeds the limits prescribed above, the balance amount may be provided by Banks without any Government subsidy

II. Purpose:

Acquisition of or investments in assets excluding land
Working capital requirements which should not be more than 40% of Project Cost in case of manufacturing units, and 60% of Project Cost in case of Business or Trading or Services units

III. Beneficiary Type:

Individuals above 18 years of age

IV. Beneficiary’s Own Contribution Requirement

For new Micro-Enterprises: 5% (vis-a-vis 10% for General Category) of Project Cost
For 2nd loan for upgradation of existing PMEGP, REGP, MUDRA units: 10% of Project Cost

V. Process & Turnaround Time

Final Submission of Application to Forwarding Application to Financing Bank: upto 3 weeks
Receipt of Application from Nodal Officer to Sanction or Rejection of Loan Application by Financing Bank: within 30 days
Receipt of Sanction Letter from Financing Bank to Submission of Own Contribution & EDP
Training Certificate by Beneficiary: within 30 working days
- You may know more about online EDP Training here and offline EDP Training here
- The applicants who have already undergone training of at least 10 Days (for offline mode) or 60 hours (for online mode) under Entrepreneurship Development Programme (EDP) OR Skill Development Programme (SDP) OR Entrepreneurship cum Skill Development Programme (ESDP) OR Vocational Training (VT), need not undergo EDP training again
Financing Bank will release the first instalment of the loan either in full or partly and submit the claim for Margin Money Subsidy online through the on-line portal of Nodal Bank or KVIC Portal
Verification & Validation of the Margin Money claims by KVIC and forwarding to Nodal Bank for onward releasing of the Margin Money to the Financing Bank: within 3 working days
- This step can be done away with if Financing Bank branch certifies that all the facts furnished in the claim are true and the above activity of the unit is not under the negative list of PMEGP scheme and is as per the norms and guidelines of PMEGP
Transfer of Margin Money Subsidy claim amount validated by KVIC (or certified by Financing Bank branch) to the respective Financing Bank branch by Nodal Bank will: within 24 hours of receipt of validation
Conversion of Margin Money Subsidy, received in the Financing Banks on behalf of the Beneficiary, to Term Deposit Receipt (TDFR) or Subsidy Reserve Fund (SRF) for three years at branch level in the name of the Beneficiary: within 24 hours of receipt of funds
- No interest will be paid on the TDR or SRF, and no interest will be charged on loan disbursed for the corresponding amount of TDR or SRF
Transfer of Margin Money Subsidy from TDR or SRF to Beneficiary’s loan account: post the completion of 3 year TDR or SRF tenure, provided the loan to Beneficiary has not gone bad before 3 years
- In case the incurred capital expenditure & working capital expenditure (at the end of the third year from the commencement of production) is less than the sanctioned amount under the Bank loan (as described below) and own contribution (as described above), the excess Margin Money Subsidy (against the shortfall) shall be refunded to KVIC
For more details, please refer to para or section 11 of PMEGP guidelines in English here or in Hindi here

VI. Terms of Loan from Financing Bank

Product: Term Loan for capital expenditure, Cash Credit for working capital requirements
Loan Ticket Size Sanction Amount:
- For new Micro-Enterprises: 95% (vis-a-vis 90% for General Category) of Project Cost
- Ror 2nd loan for upgradation of existing PMEGP, REGP, MUDRA units: 90% of Project Cost
Security: First charge over assets created out of the loan disbursed under the Scheme
Collateral: Nil security for loan ticket size upto ₹10 Lakhs. For loans in excess of ₹10 Lakhs collateral guarantee from Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) may be explored with Financing Bank
Guarantee: Nil
Insurance: For more information around this, you may need to contact your Financing Bank when designated
Interest Rate: For more information around this, you may need to contact your Financing Bank when designated
Processing Fee: For more information around this, you may need to contact your Financing Bank when designated
Tenure: 3 to 7 years excluding initial moratorium as may be prescribed by the Financing Bank
Repayments: EMI. For EMI calculations, please refer here
Turnaround Time: RBI has issued necessary guidelines to the Banks to accord priority in sanctioning projects under this Scheme

Interested? Read ahead to check your eligibility….

For new Micro-Enterprises:

I. Are you over 18 years of age?

II. Do you have a valid Aadhaar Number?

III. In case of Project Cost above ₹10 Lakhs for Manufacturing unit or above ₹5 Lakhs for Business or Trading or Services Unit, do you possess at least VIII standard pass educational qualification?

IV. Do your confirm that yours is not an existing unit under Pradhan Mantri Rozgar Yojana (PMRY), REGP or any other scheme of Government of India or State Government, and your unit has not availed Government Subsidy under any other scheme of Government of India or State Government?

V. Does your project have capital expenditure component(s)?

VI. Do you confirm that your business does not engage in activities prohibited by local government or authorities keeping in view environment or socio-economic factors?

VII. Do you confirm that your business does not engage in activities indicated in the negative list indicated in para or section 30 of PMEGP guidelines in English here or in Hindi here?

VIII. In case of Business or Trading or Service units, do you confirm that your business does not engage in activities excluded in para or section 4.1 (iv) under “Other eligibility conditions for PMEGP (New units)” of PMEGP guidelines in English here or in Hindi here?

IX. Do you confirm that you are the only person in your family obtaining financial assistance for setting up of projects under this Scheme?

X. Do you confirm that you will register your unit under Udyam Portal before Physical Verification of the Unit and the adjustment of the Margin Money Subsidy in your loan account?

For 2nd loan for upgradation of existing PMEGP, REGP, MUDRA units:

I. Has the Margin Money Subsidy claimed earlier under PMEGP been successfully adjusted on the completion of lock in period of 3 years?

II. Has the first loan availed under PMEGP or REGP or MUDRA been successfully repaid in stipulated time?

III. Is your unit profit making with good turnover and having potential for further growth in turnover and profit with modernization/upgrading the technology?

If your answers to the questions above are an emphatic YES, you are all set to avail Margin Money Subsidy under PMEGP!

So…how big is this scheme and what has been done so far?

I. An outlay of ₹ 13,554 Crores has been approved for this Scheme for Financial Years 2021-22 to 2025-26 to set up about 400,000 new units to create 30,00,000 employment. Additionally, 1,000 existing units set up under this Scheme is envisaged to be further upgraded each fiscal year

II. Since 2021-22 till date (July 30, 2024):

Loans worth ₹44,817 Crores to 455,263 projects have been sanctioned by Financing Banks under this Scheme
Loans worth ₹27,987 Crores to 367,298 projects have been disbursed by Financing Banks under this Scheme
Of the total approved outlay of ₹13,554 Crores, Margin Money Subsidy worth ₹9,310 Crores to 286,680 projects have been disbursed by KVIC under this Scheme

III. You may go through success stories of some of the beneficiaries here

IV. You may go through feedback on the Scheme here