Subsidy
PMEGP
The Prime Minister's Employment Generation Programme (PMEGP) is a credit-linked subsidy scheme of the Ministry of MSME for new micro enterprises in the non-farm sector. KVIC is the national nodal agency; in the states it is implemented through KVIC offices, Khadi and Village Industries Boards and District Industries Centres, with banks sanctioning the loans.
Status: PMEGP was approved for the 15th Finance Commission cycle up to 31 March 2026. A Lok Sabha answer of 6 August 2026 states that continuation has been appraised and that release of margin money on pending sanctioned cases is contingent on its approval. Treat the subsidy on new sanctions as uncertain until continuation is notified.
Source: Lok Sabha USQ 3188 (06.08.2026)
Margin money subsidy
| Beneficiary category | Own contribution | Subsidy (urban) | Subsidy (rural) |
|---|---|---|---|
| General | 10% | 15% | 25% |
| Special: SC/ST/OBC/minority/women/ex-servicemen/transgender/PwD, NER, hill and border areas, aspirational districts | 5% | 25% | 35% |
The maximum project cost is ₹50 lakh for manufacturing and ₹20 lakh for business or service units. Banks may lend above this, but no subsidy is given on the excess. The subsidy is held as a three-year term deposit and adjusted after physical verification of the unit.
Eligibility
- Individuals above 18 years, with no income ceiling; a Class VIII pass is required for projects above ₹10 lakh (manufacturing) or ₹5 lakh (service).
- New projects only, and one unit per family. Self-help groups, institutions, cooperatives and trusts are also eligible.
- Activities on the negative list are excluded; trading is permitted only in specified areas.
- Land cost is excluded from the project cost. Udyam registration is required before physical verification and margin money adjustment.
Second loan for upgradation
- Existing PMEGP, REGP or MUDRA units with a good track record can seek a second loan for upgradation.
- Maximum project cost of ₹1 crore (manufacturing) or ₹25 lakh (service), with a 15% subsidy (20% in NER and hill states), up to ₹15 lakh / ₹20 lakh for manufacturing and ₹3.75 lakh / ₹5 lakh for service.
How to apply
- 1
Project report
Prepare a bank-appraisable project report within the scheme limits. See subsidy DPRs.
- 2
Online application
Apply on the PMEGP portal, choosing the implementing agency (KVIC, KVIB or DIC) and the bank branch.
- 3
Bank sanction and EDP
The bank appraises and sanctions the loan; the entrepreneur completes the required entrepreneurship development training.
- 4
Margin money and verification
Margin money is released to the bank and held as a deposit, then adjusted after physical verification of the working unit.
Sources
Scheme terms change; verify on the official portal; last checked 2 Oct 2026. This page is general information for planning, not a guarantee of eligibility, sanction or disbursement. See our Terms of Use & Disclaimer.
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