How to apply online for PMEGP Government financial assistance for new businesses

Are you an entrepreneur seeking funds for setting up a new business unit in a village or town? Learn all about the Govt. of India's Prime Minister's Employment Generation Programme (PMEGP) through this informative article. It explains the salient features of PMEGP, its benefits, eligibility requirements, and the online application procedure as well.

The Ministry of Micro, Small & Medium Enterprises (MSME), Government of India initiated a flagship scheme to provide self-employment opportunities to people in both rural and urban areas through the Prime Minister's Employment Generation Programme (PMEGP). The aim is to promote entrepreneurship by giving financial assistance to set up new micro-enterprises. The financial agencies through which the funds will be disbursed include over 25 Public Sector Banks, Regional Rural Banks (RRB), Co-operative Banks and private Scheduled Commercial Banks that are approved by the State Task Force Committee of the respective States where they are located. An entrepreneur can submit only one project.

PMEGP funds for new businesses banner
[Image source: print advt. in Hindustan Times, Mumbai, 22nd February 2020.]

Eligibility requirements for PMEGP

Any individual who is a citizen of India and is above 18 years of age can register for the PMEGP. The applicant must have a minimum educational qualification of having passed Class 8 if the project cost is more than Rs.10 lakh in the manufacturing sector and more than Rs.5 lakh in the service sector. Self-Help Groups (SHGs) can also apply.

The unit to be set up should be a new one. Existing units will not be given funds under PMEGP. The new unit should fulfil the criteria for a rural area project, as also the other criteria of per capita investment, own contribution, etc. A unit can be set up in an urban area as well, but only through a District Industries Centre (DIC).

The beneficiary is expected to also make his/her own contribution as follows-
For General category beneficiaries: 10% of the project cost
For Special category beneficiaries: 5% of the project cost (refer to the special category types below, where the benefits are mentioned).

Benefits of PMEGP

Financial assistance is provided under PMEGP for setting up new micro-enterprises with the following benefits-
  1. Maximum project cost: Rs.25 lakh for the manufacturing sector, and Rs.10 lakh for the services' sector.

  2. Subsidy (Margin Money): 15% to 35% of the project cost. The specifics are-
    • For urban areas: 15% of the project cost for applicants in the General category, and 25% for applicants belonging to the special category, namely, SC, ST, OBC, Minorities, women, Ex-servicemen, physically handicapped, North-Easter Region (NER), Hill & Border areas, etc.

    • For rural areas: 25% of the project cost for applicants in the General category, and 35% for applicants belonging to the special category.

Additionally, second financial assistance will be provided for well-performing units under PMEGP and MUDRA for expansion plans or upgrading of the unit as well. For this, the benefit is Rs.1 crore for units in the manufacturing sector, and Rs.25 lakh for units in the services sector, with a 15-20% subsidy.

Collateral security under PMEGP: A project that costs up to Rs. 10 lakhs is free from collateral security. There is a Credit Guarantee Funds Trust for Micro and Small Enterprises (CGTSME)-provided collateral guarantee for the project that is more than Rs.5 lakhs and up to Rs. 25 lakhs.

What the project cost covers under PMEGP

The cost of land which is purchased to set up the project is not covered in the project's cost. The components of the project cost are:
  1. Capital Expenditure Loan.

  2. One cycle of working capital.

  3. 10% of project cost as own contribution in case of General category and 5% of project cost in case of weaker section.

Type of projects acceptable for PMEGP

When submitting the application, the beneficiary has to select the type of industry and the product from the options given. The options for the industry include:
(i) Forest-based industry; polymer and chemical industry;
(ii) Agro-based food processing industry;
(iii) Handmade paper and fibre industry;
(iv) Rural engineering and biotech industry;
(v) Service and textile industry;
(vi) Mineral-based industry; and
(vii) Coir board based industry.

You can have a look at some of the sample projects at

What is expected from the beneficiary of PMEGP

Before the claim for Margin Money (M.M.) can be made through PMEGP, it is mandatory for the beneficiary to take Entrepreneurship Development Programme (EDP) training for PMEGP of 10 working days for a project cost of more than Rs. 5 lakh and six working days of training for a project cost up to Rs.5 lakh. However, in a notification issued in January 2020, the Ministry of MSME approved the exemption of EDP training to disburse the loan/claim of the MM till 31st March 2020. This would be a short-term arrangement only, though, and beneficiaries are encouraged to take the option of EDP training [notification:].

Secondly, the working Capital at least once should touch 100% limit of Cash Credit within three years of the lock-in period of M.M. and not less than 75% of the utilization of the sanctioned limit on an average.

How to apply for for PMEGP funds

The application and project should be submitted in online mode only at the official KVIC website. Every applicant needs to give the contact details and the proposed location address of the unit, as also the sponsoring agency. The agency could be (a) Khadi & Village Industries Commission (KVIC) or (b) Khadi and Village Industries Board (KVIB) or (c) District Industries Centre (DIC).

The list of the office addresses of these can be checked out at

In the case of an individual applicant, the Aadhar number will be required. Self Help Groups, Trusts, Registered institutions, Co-operative Societies, and the like have to submit their application under the category of 'Non-Individual Applicant'. For each of these, there is a separate application page. All such non-individual applicants will be required to provide information on the registration date, Tax Deduction and Collection Account Number (TAN) number, and the name of the authorized person.

After filling up the application fully, click on 'Save Applicant Data' and then upload the requisite documents. On the final submission of the e-application, you will receive an applicant ID and password at your registered mobile number.

For guidance to fill up the online application, have a look at the video tutorial:

Best wishes to fulfilling your entrepreneurial dream through PMEGP! Before leaving this informative page, know more about the MSME Business Ideas challenge as well.

Article by Vandana
Vandana is based in India with over 15 years experience as a freelance writer. Writing, no doubt, is her primary passion! Having learned the art of blogging from ISC, Vandana is enjoying the thrills of blogging, taking pleasure in sharing information & getting good pageviews at her various blogs.

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