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What is the PMEGP Scheme and How to Apply For PMEGP Scheme



Are you ready to embark on a transformative journey towards entrepreneurship? The Prime Minister's Employment Generation Programme (PMEGP) is not just a scheme; it's your gateway to turning entrepreneurial dreams into thriving ventures. In this comprehensive guide, we'll unravel the intricacies of the PMEGP Scheme, designed to empower individuals and fuel economic growth by creating job opportunities through micro-enterprises. From understanding eligibility criteria to navigating the online application seamlessly, we've covered you at every step. Whether you're a budding entrepreneur or an established professional seeking to expand your horizons, this guide will equip you with the knowledge and tools needed to effectively harness the PMEGP Scheme's benefits. It's time to embrace the opportunity, kickstart your entrepreneurial aspirations, and contribute to the economic landscape.

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Understanding the PMEGP Scheme

To understand the Prime Minister’s Employment Generation Programme, you may have a look at the objectives of this scheme. The scheme aims to fulfil the following objectives-

  • Generating Employment Opportunities: Foster employment opportunities in both rural and urban areas by establishing new self-employment ventures, projects, and micro-enterprises.
  • Empowering Traditional Artisans and Unemployed Youth: Bring together dispersed traditional artisans and unemployed youth from rural and urban areas, offering them self-employment opportunities at their localities.
  • Ensuring Continuous and Sustainable Employment: Provide a consistent and sustainable source of employment for a significant portion of traditional artisans and unemployed youth, aiming to curb the migration of rural youth to urban areas.
  • Enhancing Wage-Earning Capacity: Contribute to the growth of rural and urban employment by increasing the wage-earning capacity of workers and artisans, thereby fostering an overall rise in the employment growth rate.

Eligibility Criteria for the PMEGP Scheme

Before applying for the scheme and executing a project under the PMEGP you need to understand the eligibility criteria. It can be different for new and existing projects as given below-

PMEGP New Enterprises (New Unit) Eligibility

If you are willing to start a new enterprise under the PMEGP Scheme, you must fulfil the following requirements-

  • Any individual above 18 years old is eligible.
  • No income ceiling for project assistance under PMEGP.
  • Educational qualification is required for projects over Rs.10 lakh (Manufacturing) or Rs. 5 lakh (Business/Service).
  • Assistance is available only for new projects sanctioned under PMEGP.
  • Existing units under other government schemes or those already receiving subsidies are not eligible.
  • Projects without capital expenditure are ineligible for financing under the scheme.
  • Land cost is excluded from the project cost. Ready-built shed cost and long lease/rental workshed/workshop costs can be included for a maximum period of 3 years.
  • PMEGP applies to new viable microenterprises, including Village Industries projects, except for activities prohibited by local government or authorities, considering environmental and socio-economic factors and activities in the negative list.
  • Trading activities are permitted in specific regions, including sales outlets in NER, LWE-affected districts, and A & N Islands. Retail outlets selling specific products may be permitted nationwide, and those backed by manufacturing/service facilities are allowed across the country.
  • The maximum project cost for Business/Trading activities is Rs.20 lakh. Up to 10% of the financial allocation in a state can be used for Business/Trading activities.
  • Transport activities, such as purchasing vehicles for tourists or public transportation, are allowed with a 10% ceiling on project financing, except in specific regions.
  • Only one person per family, including self and spouse, is eligible for financial assistance under PMEGP.

For Upgradation of Existing Units

If you own any of the existing units and want to upgrade them, you can do so under the PMEGP Scheme. These existing units can be from other schemes as well including PMEGP, REGP, and MUDRA. Eligibility Conditions for the upgradation of these existing units are as follows-

  • Margin Money (subsidy) claimed under PMEGP must be adjusted successfully at the end of the 3-year lock-in period.
  • The first loan under PMEGP/REGP/MUDRA must be repaid within the specified timeframe.
  • The unit should be profitable with a good turnover and exhibit potential for further growth in turnover and profit through modernization and technology upgrades.

Steps to Apply for the PMEGP Scheme

The application procedure for the Prime Minister's Employment Generation Programme (PMEGP) involves an online process with the following key steps-

Project Proposal Invitation

  • KVIC, KVIBs, DICs, and other implementing agencies (IAs) invite project proposals from potential beneficiaries at the district level through various channels like press, advertisements, radio, and multimedia.
  • Panchayati Raj Institutions and government organizations are also involved in publicising the scheme and identifying beneficiaries.

Online Application

  • Online applications are mandatory through the PMEGP Portal developed by KVIC.
  • Separate online application forms are available for individuals setting up new units and upgrading existing ones.
  • Applicants receive a User ID and Password upon initial registration, which is used for tracking the application status.
  • An aadhaar number is mandatory and authenticated with the UIDAI database. Alternate means of identification are provided for areas where Aadhaar is not issued.
  • Applicants upload necessary documents, including caste certificate, special category certificate, rural area certificate, project report, education/EDP/skill development training certificate, and other relevant documents.
  • Applicants fill in all required information on the online form and apply. They receive a unique Application ID for tracking.

Scrutiny, Appraisal and Sanction

  • Nodal officers of KVIC, State KVIB, DIC, and other IAs interact with applicants within five working days to confirm the receipt and acceptance of the application for preliminary scrutiny.
  • Applications meeting eligibility criteria are forwarded to Financing Banks for credit decisions based on the project cost and minimum score.
  • Financing Banks appraise projects and make credit decisions. Sanction letters are issued within 30 days, and EDP training is mandatory before loan disbursement.
  • Financing Banks claim the Margin Money subsidy online, and the claim is validated by KVIC before disbursement.
  • Beneficiaries deposit the Margin Money subsidy in a Term Deposit Receipt (TDR)/Subsidy Reserve Fund (SRF) for three years.

Loan Repayment and Monitoring

  • DLMC is set up in each district to monitor PMEGP implementation and submit quarterly reports.
  • An Online Grievance Portal and Cell are established for addressing complaints. Appellate authorities are designated for unresolved grievances.
  • Applicants can undertake EDP training after applying. Loan repayment, unit monitoring, and physical verification are captured in the PMEGP MIS portal.

Subsidy for Upgrading Existing Units

If you are working already on a project supported by eligible schemes under the PMEGP, you can get a subsidy for the project under the Prime Minister’s Employment Generation Programme. The subsidy for  upgrading existing units under PMEGP offers financial assistance to well-performing units. Manufacturing units can receive up to Rs. 1.00 crore with a 15-20% government subsidy, while Service or Trading units are eligible for up to Rs. 25 lakhs. Selection involves choosing approximately 10 units from each district based on factors like population density and industrial development. KVIC has streamlined the application process through the PMEGP e-portal.

District-level agencies conduct preliminary scrutiny and forward applications to Financing Banks. The banks appraise projects, claim Margin Money subsidy, and retain it as TDR/SRF for three years with no interest. After a lock-in period of three years, TDR/SRFs are adjusted in the loan account based on a positive third-party agency verification report. Margin Money is adjusted by the Financing Bank upon receipt of the adjustment letter from the implementing agency.


In conclusion, the Prime Minister's Employment Generation Programme (PMEGP) stands as a robust initiative with multifaceted objectives. It strives to not only generate employment opportunities but also empower traditional artisans and curb rural-to-urban migration. Understanding the eligibility criteria for new and existing projects is crucial, ensuring that individuals and units meet the necessary conditions for financial assistance. From project proposal invitations to the final scrutiny and sanction, the scheme ensures a systematic and efficient approach. For those seeking to upgrade existing units, the subsidy component offers a golden opportunity. PMEGP is a catalyst for economic transformation and individual empowerment. By providing financial support and fostering entrepreneurship, PMEGP contributes significantly to the nation's economic growth and employment landscape. It's an inclusive journey towards self-reliance and prosperity, one project at a time.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not corpseed, and have not been evaluated by corpseed for accuracy, completeness, or changes in the law.


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Yash Chauhan is a law graduate from the University of Delhi and a skilled content writer at Corpseed. With a keen interest in the legal industry, he specializes in writing articles on contemporary legal developments, corporate compliances,...

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