Government subsidy toward your first enterprise.
PMEGP is a credit-linked capital subsidy scheme for new micro enterprises, administered by KVIC with District Industries Centres. A bank loan funds the project; the government subsidises 15–35% of the cost as margin money, reducing what you actually owe.
How the subsidy actually reduces your loan
You bring 5–10% of the project cost as your own contribution, a bank funds the balance as a term loan, and once the unit is operational the government credits its subsidy — 15% to 35% of project cost depending on category and location — directly against your loan account, reducing the outstanding principal. From 2026, project cost limits stand at ₹50 Lakh for manufacturing units and ₹20 Lakh for service and business-sector units, with a second-loan facility of up to ₹1 Crore for manufacturing and ₹25 Lakh for services available to successful first-time PMEGP units seeking to expand.
Subsidy rates are higher for special categories: women, SC/ST, ex-servicemen, persons with disabilities, and units in the North East and hill states typically receive 25–35%, against 15–25% for general category applicants, with rural locations attracting a higher rate than urban ones within each category.
The subsidy component can be guaranteed under CGTMSE where the bank loan meets eligibility criteria, meaning many PMEGP projects proceed without any collateral requirement at all — margin money subsidy for part of the cost, CGTMSE guarantee for the rest.
Who can apply
- Any individual above 18 years, no upper age limit
- For projects above ₹10 Lakh (manufacturing) or ₹5 Lakh (services), minimum Class VIII pass
- Only new (greenfield) projects — existing units are not eligible
- Self-help groups, trusts, societies and cooperative societies may also apply
- One PMEGP subsidy per family / household, generally
What trips up PMEGP applicants
Assuming an existing business can apply
PMEGP funds only new, greenfield units. An expanding existing business should look at Mudra, CGTMSE-backed bank credit, or the PMEGP second-loan facility if the original unit itself was PMEGP-funded and has been running successfully.
Underestimating the project report requirement
A thin or generic project report is the most common reason for delay at the District Industries Centre stage. A detailed, realistic report with proper costing gets through appraisal considerably faster than an optimistic, sparse one.
Not knowing the subsidy is credited after disbursal, not before
The subsidy reduces your outstanding loan once the unit is operational and the bank claims it, not upfront. You need the full margin money and bank loan in place to start the project; the subsidy arrives afterward.
Documents required
Incomplete files cause most multi-week delays. We assemble the full set upfront, in the order credit teams read it.
KYC & constitution
- PAN & Aadhaar of all promoters / partners / directors
- Certificate of incorporation, MOA-AOA or partnership deed
- Board resolution or partners' authority letter
- GST registration & trade licence
Project papers
- Detailed project report with cost estimate
- Educational qualification certificate, where applicable
- Caste / category certificate, for special-category subsidy rate
- Premises documents — owned or leased
- Udyam registration (post-sanction, typically)
The PMEGP application path
Project report and category check
We help build a bankable project report and confirm which subsidy category and rate applies to you.
DIC / KVIC application
Application filed through the appropriate District Industries Centre or KVIC office along with the bank loan application.
Bank sanction and EDP training
Bank sanctions the loan; mandatory Entrepreneurship Development Programme training is completed as required.
Disbursal and subsidy credit
Loan disbursed, unit becomes operational, and the subsidy is credited against the loan account by the bank in due course.
Related facilities & deep-dive guides
Every facility below is placed through the same 80+ lender panel. The long-form guides carry the working numbers, worked examples and lender-by-lender detail.
Frequently Asked Questions
The questions our advisory desk is asked most often about PMEGP.
Generally no — PMEGP funds new, greenfield projects only. A second-loan facility of up to ₹1 Crore for manufacturing and ₹25 Lakh for services is available specifically for successful existing PMEGP units seeking to expand, but a business that started outside PMEGP cannot access this route.
Between 15% and 35% of project cost, depending on whether you fall into the general or special category (women, SC/ST, ex-servicemen, persons with disabilities, North East/hill states) and whether the unit is in a rural or urban location.
₹50 Lakh for manufacturing units and ₹20 Lakh for service and business-sector units, from the 2026 revised limits. A second loan of up to ₹1 Crore (manufacturing) or ₹25 Lakh (services) is available for successful existing PMEGP units.
Typically not, where the bank loan component qualifies for CGTMSE guarantee cover, which most eligible PMEGP projects do. Combined with the margin money subsidy, this makes PMEGP one of the more accessible routes for a genuine first-time entrepreneur.
Three to six weeks is a reasonable expectation, including Entrepreneurship Development Programme training where mandated, District Industries Centre appraisal and bank sanction. A well-prepared project report moves noticeably faster than a generic one.
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