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PMEGP: the Prime Minister's Employment Generation Programme, loan and subsidy explained

PMEGP, the Prime Minister's Employment Generation Programme, helps people set up new non-farm micro enterprises with a bank loan plus a margin-money subsidy of 15% to 35% of project cost. Projects can cost up to ₹50,00,000 in manufacturing and ₹20,00,000 in services. KVIC runs it nationally with state agencies.

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Last checked

Is PMEGP open in 2026?

Yes, on the evidence we could read. This is the status as of 02-Oct-2026.

We found no published approval of the next five-year cycle, so this page gives no end date. The terms shown are the current guidelines. If you read a different figure elsewhere, check the date on it.

PMEGP full form and who runs it

PMEGP stands for the Prime Minister's Employment Generation Programme. It is a credit-linked subsidy scheme for new non-farm micro enterprises, run by the Ministry of MSME (PIB press release).

KVIC, the Khadi and Village Industries Commission, is the national nodal agency. Its state offices, the State Khadi and Village Industries Boards (KVIBs) and the District Industries Centres (DICs) carry it out in the field. The Coir Board is the agency for coir units (PIB press release, PMEGP guidelines compendium).

Between 2021-22 and 2025-26 the scheme set up 4,03,706 micro enterprises against a target of 4,02,000, and created about 36,33,000 jobs (PIB press release, 07-May-2026).

PMEGP at a glance

Item What the scheme says Source
Maximum project cost ₹50,00,000 in manufacturing, ₹20,00,000 in business or services Ministry of MSME annual report 2025-26
Subsidy 15% (urban) and 25% (rural) for general applicants. 25% (urban) and 35% (rural) for special categories Ministry of MSME annual report 2025-26
Bank loan 90% of the project cost for general applicants, 95% for special categories PMEGP guidelines compendium
Own contribution 10% for general applicants, 5% for special categories PMEGP guidelines compendium
Projects allowed New projects only, with capital expenditure. Land cost is not part of the project cost PMEGP portal
Interest The bank's normal rate. Repayment over 3 to 7 years after a moratorium PMEGP guidelines compendium
Collateral None up to ₹20,00,000 for loans sanctioned or renewed from 01-Apr-2026 RBI notification, RBI notification, 09-Feb-2026
Udyam Compulsory before the unit's physical verification and the subsidy adjustment PMEGP portal

The older guideline copies still print a collateral limit of ₹10,00,000. That was the rule before 01-Apr-2026. RBI's direction of 09-Feb-2026 raised it to ₹20,00,000 (RBI notification, 09-Feb-2026).

The subsidy is not paid to you in cash. The bank keeps it as a three-year term deposit in your name, and credits it to your loan account after the lock-in. See the PMEGP subsidy guide.

PMEGP loan interest rate

PMEGP does not set a concessional rate. The bank charges its normal rate of interest (PMEGP guidelines compendium). The benefit of the scheme is the subsidy, not a cheaper rate. The bank pays no interest on the subsidy deposit, and it charges no interest on the loan amount that matches it (PMEGP guidelines compendium).

Who can apply

Any individual above 18 can apply, and there is no income ceiling (PMEGP portal). A project above ₹10,00,000 in manufacturing, or above ₹5,00,000 in business or services, needs an applicant who has passed Class VIII (PMEGP portal). Only one person from a family can apply (PMEGP portal). The PMEGP eligibility guide has the full test.

How to apply for a PMEGP loan online

You apply on the government portal, pmegp.msme.gov.in. Indian Bank hosts and maintains it (PMEGP portal). The steps in the scheme guidelines are as follows (PMEGP guidelines compendium):

  1. Authenticate with Aadhaar and fill in the application.
  2. Upload your documents, including the project report. The form links to a template for your own report (PMEGP guidelines compendium).
  3. Submit. A self-assessed score is generated, and you get an Application ID.
  4. The implementing agency scrutinises it. It forwards the corrected application to the bank within three weeks.
  5. The bank decides. It sanctions or refuses within 30 days of receiving the file.
  6. Complete the EDP training. The Entrepreneurship Development Programme is compulsory before the bank releases the loan. Prior training of at least 10 days offline or 60 hours online exempts you (PMEGP guidelines compendium).
  7. Pay your own contribution and give the EDP certificate to the bank within 10 working days of the sanction (PMEGP guidelines compendium).
  8. The bank releases the loan and claims the subsidy online.

The portal also takes offline applications in 19 regional languages, which you submit to the nearest implementing-agency office (Ministry of MSME annual report 2025-26, PMEGP portal). The screens change, so use the portal's own user manual. Do not pay anyone to file the application for you.

Second loan for upgrading a unit

An existing PMEGP, REGP or Mudra unit can take a second loan if it repaid the first on time and made profits for three years. The project can cost up to ₹1,00,00,000 in manufacturing or ₹25,00,000 in services. The subsidy is 15%, or 20% in the North East and hill states (PMEGP portal, Ministry of MSME annual report 2025-26).

What PMEGP does not fund

The scheme does not help existing units, units that already took a government subsidy, projects without capital expenditure, or land cost (PMEGP portal). A negative list also bars some activities. The eligibility guide summarises it. A project financed by two lenders is not eligible for the subsidy (PMEGP guidelines compendium).

PMEGP in numbers

From its start to 31-Dec-2025, the scheme has set up about 10,73,000 units and created about 87,37,000 jobs. About 80% of the units are rural (Ministry of MSME annual report 2025-26). These counts are the Ministry's, and a lender does not need them to decide your loan.

Your next step

Banks fund PMEGP projects they believe can repay. Run the free loan readiness check to see how a lender may read your plan and records. Then read the PMEGP subsidy guide, the documents list and the project report guide. For machinery, see equipment financing. The government schemes hub compares PMEGP with the others. Hindi readers can use the PMEGP loan kaise le guide.

In this section

PMEGP loan documents A PMEGP application needs a project report, an education, EDP or skill training certificate, and, where they apply, a caste certificate, a special category certificate and a rural area certificate. Institutions add their registration and authorisation. New units must also register on Udyam before the subsidy is adjusted. PMEGP loan eligibility Any individual above 18 can apply for PMEGP, with no income ceiling. Projects above ₹10,00,000 in manufacturing or ₹5,00,000 in services need a Class VIII pass. Only new projects with capital expenditure qualify, one person per family, and units that already took a government subsidy are excluded. EDP training is mandatory. PMEGP subsidy PMEGP pays a one-time margin-money subsidy on a new unit's project cost. General applicants get 15% in urban areas and 25% in rural areas. Special-category applicants, including SC, ST, OBC, women and ex-servicemen, get 25% urban and 35% rural, and contribute 5% of the cost instead of 10%.

Frequently asked questions

It is a Ministry of MSME scheme that pays a margin-money subsidy on a bank loan for a new non-farm micro enterprise (PIB press release).

The Prime Minister's Employment Generation Programme (PIB press release).

No. It is funded in the Union Budget 2026-27, and the portal takes applications. We found no published approval for the next five-year cycle, so we give no end date (Union Budget 2026-27, demands for grants).

Apply on pmegp.msme.gov.in with your Aadhaar and project report, or offline at an implementing-agency office. The agency forwards the file to the bank, which decides (PMEGP portal, PMEGP guidelines compendium).

District Industries Centre. It is one of the state-level agencies that carry out the scheme (PMEGP guidelines compendium).

The Entrepreneurship Development Programme. It is compulsory before the bank releases the loan, unless you already have at least 10 days of offline or 60 hours of online training (PMEGP guidelines compendium).

Any bank that finances PMEGP projects can take your application. Banks take their own credit decision on the viability of each project, so ask more than one (PMEGP guidelines compendium).

The scheme does not publish a minimum score. The bank appraises the project and takes its own credit decision (PMEGP guidelines compendium).

Sources

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