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A. Introduction:

Government of India has approved the introduction of a new credit linked subsidy programme called Prime Minister’s Employment Generation Programme (PMEGP) by merging the two schemes that were in operation till 31.03.2008 namely Prime Minister’s Rojgar Yojana (PMRY) and Rural Employment Generation Programme (REGP) for generation of employment opportunities through establishment of micro enterprises in rural as well as urban areas. PMEGP will be a central sector scheme to be administered by the Ministry of Micro, Small and Medium Enterprises (MoMSME).

B. Levels of funding under PMEGP

Categories of beneficiaries under PMEGP

Beneficiary’s contribution (of project cost)

Rate of Subsidy (of project cost)

Rate of Subsidy (of project cost)

Area (location of project/unit)



General Category




Special (including SC / ST / OBC /Minorities/Women, Ex-servicemen, Physically handicapped, NER, Hill and Border areas etc.





1. The maximum cost of the project/unit admissible under manufacturing sector is Rs. 25 lakh.

2. The maximum cost of the project/unit admissible under business/service sector is Rs. 10 lakh.

3. Excluding beneficiary’s contribution, the balance amount of the total project cost will be provided by Banks as term loan.

C. Eligibility Conditions of Beneficiaries

1. Any individual, above 18 years of age.

2. There will be no income ceiling for assistance for setting up projects under PMEGP.

3. For setting up of project costing above Rs.10 lakh in the manufacturing sector and above Rs. 5 lakh in the business /service sector, the beneficiaries should possess at least VIII standard pass educational qualification.

4. Assistance under the Scheme is available only for new projects sanctioned specifically under the PMEGP.

5. Self Help Groups (including those belonging to BPL if they have not availed benefits under any other Scheme) are also eligible for assistance under PMEGP.

6. Institutions registered under Societies Registration Act,1860.

7. Production Co-operative Societies.

8. Charitable Trusts.

9. Existing Units (under PMRY, REGP or any other scheme of Government of India or State Government) and the units that have already availed Government Subsidy under any other scheme of Government of India or State Government are not eligible.

D. Other eligibility conditions

1. A certified copy of the caste/community certificate or relevant document issued by the competent authority in the case of other special categories, is required.

2. A certified copy of the byelaws of the institutions is required to be appended to the Margin Money (subsidy) Claim, wherever necessary.

3. Project cost will include Capital Expenditure and one cycle of Working Capital. Projects without Capital Expenditure are not eligible for financing under the Scheme. Projects costing more than Rs.5 lakh, which do not require working capital, need clearance from the Regional Office or Controller of the Bank’s Branch and the claims are required to be submitted with such certified copy of approval from Regional Office or Controller, as the case may be.

4. Cost of the land should not be included in the Project cost. Cost of the ready built as well as long lease or rental Work-shed/Workshop can be included in the project cost subject to restricting such cost of ready built as well as long lease or rental work shed/workshop to be included in the project cost calculated for a maximum period of 3 years only.

5. PMEGP is applicable to all new viable micro enterprises, including Village Industries projects except activities indicated in the negative list of Village Industries (refer point number F below). Existing/old units are not eligible.


1. The Institutions/Production Co-operative Societies/Trusts specifically registered as such and SC/ ST/ OBC/ Women/ Physically Handicapped / Ex-Servicemen and Minority Institutions with necessary provisions in the byelaws to that effect are eligible for Margin Money (subsidy) for the special categories. However, for Institutions/ Production Cooperative Societies/Trusts not registered as belonging to special categories, will be eligible for Margin Money (Subsidy) for general category.

2. Only one person from one family is eligible for obtaining financial assistance for setting up of projects under PMEGP. The ‘family’ includes self and spouse.

E. Rate of interest and repayment schedule

Normal rate of interest shall be charged. Repayment schedule may range between 3 to 7 years after an initial moratorium as may be prescribed by the concerned bank/financial institution.

F. Negative List of Activities

The following list of activities will not be permitted under PMEGP for setting up of micro enterprises/ projects /units.

1. Any industry/ business connected with Meat(slaughtered), i.e. processing, canning and/or serving items made of it as food, production/manufacturing or sale of intoxicant items like Beedi/Pan/ Cigar/Cigarette etc., any Hotel or Dhaba or sales outlet serving liquor, preparation/producing tobacco as raw materials, tapping of toddy for sale.

2. Any industry/business connected with cultivation of crops/plantation like Tea, Coffee, Rubber etc. sericulture (Cocoon rearing), Horticulture, Floriculture. Value addition under these will be allowed under PMEGP

3. Any industry/business connected with Animal Husbandry like Pisciculture, Piggery, Poultry, etc.

3. Manufacturing of Polythene carry bags of less than 20 microns thickness and manufacture of carry bags or containers made of recycled plastic for storing, carrying, dispensing or packaging of food stuff and any other item which causes environmental problem

G. Documents required for registration

1. Passport size photo

2. Aadhaar Card

3. Birth Certificate/ School Leaving Certificate/ Domicile Certificate (if required)

4. Caste Certificate

5. Special Category Certificate, wherever required.

6. Rural Area certificate.

7. Project Report.

8. Education/ EDP/Skill Development training certificate

9. In case of Institutions self-attested copies of the following are also required:

a. Registration certificate

b. Authorization letter/copy of byelaws authorizing Secretary etc. to apply.

c. Certificate for Special Category, wherever required.

Feel free to reach us to know more about the PMEGP Scheme.

Compiled by - Amruta Sohani

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