- Up to 35%Subsidy on project cost15% at the least
- ₹50 LManufacturing project₹20 L for service
- 5% to 10%Your own share
- 3 yearsSubsidy lock-in
PMEGP status in 2026-27: is the scheme still open?
Yes, PMEGP is running in 2026-27. The government approved it for five years, 2021-22 to 2025-26, with a budget of ₹13,554.42 crore. That cycle ended on 31 March 2026, with about 4,03,706 new units set up.
The scheme did not stop. On 28 October 2026, the Ministry of MSME released ₹1,000 crore of subsidy for 11,333 new units, and the official portal still takes new applications.
As of 2 November 2026, the government had not announced a formal decision on the next five-year period. News reports say an extension up to 2030-31 is being considered. Until new rules are notified, the rules below (from the 2021-26 guidelines) apply. Subsidy is paid only when funds are available for the year.
What is the PMEGP scheme?
PMEGP is a scheme of the Ministry of Micro, Small and Medium Enterprises (MSME). It helps people set up a new small business, in manufacturing, service or trade, in a village or a town. The bank gives the loan. The government pays part of the project cost as a subsidy, called margin money.
The Khadi and Village Industries Commission (KVIC) runs the scheme across India. You can apply through KVIC, your State Khadi and Village Industries Board (KVIB), the District Industries Centre (DIC), or the Coir Board for coir units.
- Step 1Apply onlineOn pmegp.msme.gov.in, with a project report.
- Step 2Bank gives the loan90% to 95% of the project cost.
- Step 3Subsidy cuts the loan15% to 35% of the cost, adjusted after 3 years.
Example: Sunita, 34, a village in Bihar. She starts a small masala grinding unit costing ₹10,00,000. As a woman in a rural area, she is in the special category. She puts in 5% herself. The bank lends the rest. The government pays a 35% subsidy.
- Her own share
- ₹50,000
- Bank loan
- ₹9,50,000
- PMEGP subsidy
- ₹3,50,000
PMEGP subsidy rates: urban and rural
The subsidy depends on two things: your category and where the unit is. Areas under a Panchayati Raj body (a village) count as rural. Areas under a municipality count as urban.
| Category | Your own share | Subsidy (urban) | Subsidy (rural) |
|---|---|---|---|
| General | 10% | 15% | 25% |
| Special | 5% | 25% | 35% |
Special category means: Scheduled Castes (SC), Scheduled Tribes (ST), Other Backward Classes (OBC), Minorities, Women, Ex-servicemen, Persons with disabilities, Transgender persons, Applicants from the North Eastern Region, hill and border areas, Applicants from aspirational districts.
Subsidy at a few project sizes (the most project cost that gets subsidy is the limit for that sector):
| Project cost | General, urban | General, rural | Special, urban | Special, rural |
|---|---|---|---|---|
| ₹5,00,000 (service) | ₹75,000 | ₹1,25,000 | ₹1,25,000 | ₹1,75,000 |
| ₹10,00,000 (manufacturing) | ₹1,50,000 | ₹2,50,000 | ₹2,50,000 | ₹3,50,000 |
| ₹20,00,000 (service) | ₹3,00,000 | ₹5,00,000 | ₹5,00,000 | ₹7,00,000 |
| ₹25,00,000 (manufacturing) | ₹3,75,000 | ₹6,25,000 | ₹6,25,000 | ₹8,75,000 |
| ₹50,00,000 (manufacturing) | ₹7,50,000 | ₹12,50,000 | ₹12,50,000 | ₹17,50,000 |
The highest PMEGP subsidy is ₹17,50,000 for a manufacturing unit and ₹7,00,000 for a service unit, both for a special category applicant in a rural area.
PMEGP loan: worked example for a rural woman
Here is how Sunita's ₹10,00,000 project is funded, step by step. All figures are 5%, 95% and 35% of ₹10,00,000.
| Step | Amount |
|---|---|
| Total project cost | ₹10,00,000 |
| Sunita's own share (5%) | ₹50,000 |
| Bank loan (95%) | ₹9,50,000 |
| PMEGP subsidy (35%), kept in a deposit for 3 years | ₹3,50,000 |
| Loan she finally repays, if the unit runs for 3 years | ₹6,00,000 |
Her project is a manufacturing unit of ₹10 lakh, which is not above the ₹10 lakh line, so she does not need a Class 8 pass. A service project of the same size would need it.
A general category man in a town, with the same ₹10,00,000 project, would put in ₹1,00,000 himself and get a subsidy of ₹1,50,000. His final loan would be ₹7,50,000.
To see the monthly EMI on the part you repay, use the EMI calculator with your bank's rate.
PMEGP loan interest rate
- No fixed PMEGP rate. The bank charges its normal interest rate for that kind of business loan. It differs from bank to bank and with your profile. Ask the bank for the rate in writing before you sign.
- No interest on the subsidy part. The subsidy sits in a term deposit in your name for 3 years. The deposit earns no interest, and the bank charges no interest on the same amount of your loan.
- Repayment: 3 to 7 years, after a short starting break (moratorium) that the bank sets.
- Collateral: under RBI rules, banks should not ask for collateral on micro and small enterprise loans up to ₹10 lakh. Larger loans can be covered by a CGTMSE guarantee.
PMEGP eligibility: who can apply?
- Yes: Any person above 18 years of age, with no income limit
- Yes: Someone setting up a new unit (manufacturing, service or trade)
- Yes: Self-help groups that have not taken another government subsidy
- Yes: Societies registered under the Societies Registration Act, 1860
- Yes: Production co-operative societies and charitable trusts
- No: An existing business, for the first loan
- No: A unit that already took a government subsidy under PMRY, REGP or another central or state scheme
- No: A second person from the same family (you and your spouse count as one family)
- No: Activities on the negative list, such as meat, liquor, tobacco or pan, and farming itself
- No: Projects with no capital spending (only working capital)
PMEGP education rule: you must have passed at least Class 8 for a manufacturing project above ₹10,00,000, or a service or business project above ₹5,00,000. Smaller projects need no education.
| Education | Manufacturing, at most | Service or business, at most |
|---|---|---|
| Below Class 8 | ₹10,00,000 | ₹5,00,000 |
| Class 8 pass or more | ₹50,00,000 | ₹20,00,000 |
PMEGP project cost rules
- Project limit: ₹50,00,000 for manufacturing and ₹20,00,000 for service and trade. Above that, the bank may lend more, without subsidy.
- Land is not counted in the project cost. A ready-built shed or workshop on rent can be counted for up to 3 years.
- Working capital can be at most 40% of the project cost for manufacturing and 60% for service and trade.
- Project report: you need one with the cost of machines, raw material and expected sales. The portal has sample project reports for many activities.
How to apply for PMEGP online
- Step 1Register on the portalGo to pmegp.msme.gov.in, choose the form for a new unit, and verify with Aadhaar and mobile OTP.
- Step 2Fill the formYour details, the activity, the place, the project cost and your preferred bank and agency.
- Step 3Upload documentsProject report, photo and certificates (see below).
- Step 4Agency checks itKVIC, KVIB or DIC reviews the application and sends it to the bank you chose.
- Step 5Bank sanctions the loanThe bank checks the project and sanctions the loan.
- Step 6Finish EDP trainingCompulsory before the loan is released.
- Step 7Loan and subsidy releasedThe bank releases the loan. The subsidy goes into a term deposit in your name.
You can also fill an offline form, available in many Indian languages, and give it at the nearest KVIC, KVIB or DIC office. Applying is free. Use only the official portal or the agency office. Do not pay any agent who promises a PMEGP loan.
Documents for a PMEGP application:
| Document | Who needs it |
|---|---|
| Aadhaar card and PAN card | Everyone |
| Passport-size photo | Everyone |
| Project report | Everyone |
| Class 8 (or higher) pass certificate | Manufacturing projects above ₹10 lakh, service projects above ₹5 lakh |
| Caste certificate or special category certificate | Special category applicants |
| Rural area or population certificate | Units in rural areas |
| EDP training certificate | Before the loan is released |
| Udyam registration | Before the unit's physical check and the subsidy adjustment |
PMEGP EDP training
EDP means Entrepreneurship Development Programme. Every PMEGP applicant must finish it before the bank releases the loan. It covers the basics of running a business: accounts, marketing, bank rules and how the scheme works.
- The implementing agency arranges it, in a classroom or online.
- The length depends on the project and the agency. A classroom course can run for up to about 2 weeks.
- People who have already done an approved EDP or skill training may not need to repeat it. Ask your agency.
PMEGP margin money: the 3-year lock-in
The subsidy does not come to you as cash. The bank keeps it in a term deposit (TDR) in your name for 3 years. If your unit is running well after that, the subsidy is used to pay off that much of your loan.
- If the unit closes, or the money was not used for the project, the subsidy is taken back.
- If less was spent on machines or working capital than planned, the extra subsidy is returned to KVIC.
- Udyam registration is needed before the physical check and the adjustment.
PMEGP second loan for upgrading
A unit that did well can get a second loan to grow, with a smaller subsidy. This is open to units set up under PMEGP, REGP or Mudra.
- Yes: The first loan was repaid on time
- Yes: The subsidy on the first loan was adjusted
- Yes: The unit made a profit in each of the last 3 years
- Yes: Udyam registration
- No: A unit whose first loan is still in default
- No: A unit that never received a PMEGP, REGP or Mudra loan
| Manufacturing | Service or business | |
|---|---|---|
| Most project cost | ₹1,00,00,000 | ₹25,00,000 |
| Subsidy at 15%, at most | ₹15,00,000 | ₹3,75,000 |
| North East and hill states at 20%, at most | ₹20,00,000 | ₹5,00,000 |
| Your own share | 10% | 10% |
You can take the second loan from the same bank or a different one. Apply on the same portal, under the second loan form.
Who runs PMEGP: KVIC, KVIB, DIC and Coir Board
- Step 1KVIC: Khadi and Village Industries CommissionNational nodal agency, with state and divisional offices
- Step 2KVIB: State Khadi and Village Industries BoardsImplementing agency in each state
- Step 3DIC: District Industries CentresImplementing agency in each district
- Step 4Coir Board: Coir BoardImplementing agency for coir-based units
Any of these agencies can take your application, whether your unit is in a village or a town. Banks that lend under PMEGP include public sector banks, regional rural banks, co-operative banks, private scheduled banks and SIDBI.
PMEGP: strengths and limits
- Yes: A real grant of 15% to 35% of the project cost, not just a cheaper loan
- Yes: Small own share: 5% to 10%
- Yes: No income limit
- Yes: Higher subsidy for women, SC, ST, OBC and rural units
- No: Only for new units (except the second loan)
- No: The subsidy is locked for 3 years and can be taken back
- No: The bank's normal interest rate applies, and banks can reject a project
- No: Subsidy depends on funds available in the year
PMEGP vs Mudra loan
| PMEGP | Mudra loan | |
|---|---|---|
| What you get | Bank loan plus 15% to 35% subsidy | Bank loan only, no subsidy |
| For | New units only (first loan) | New and existing small businesses |
| Loan size | Project up to ₹50 L (mfg) or ₹20 L (service) | Up to ₹20 lakh |
| Own share | 5% to 10% | Set by the bank |
| Training | EDP compulsory | Not required |
| Interest | Bank's normal rate | Bank's normal rate |
Read the full Pradhan Mantri Mudra Yojana page for Mudra loan rules. A unit started with a Mudra loan can later apply for the PMEGP second loan.
Frequently asked questions
What is the PMEGP scheme?
PMEGP (Prime Minister's Employment Generation Programme) is a Government of India scheme that helps people start a new small business. A bank gives the loan and the government pays a subsidy of 15% to 35% of the project cost. It is run by the Ministry of Micro, Small and Medium Enterprises (MSME) through KVIC.
What is the full form of PMEGP?
Prime Minister's Employment Generation Programme. It started in 2008-09 by merging two older schemes, PMRY and REGP.
Is PMEGP still running in 2026-27?
Yes. Its approved cycle was 2021-22 to 2025-26, but the Ministry of MSME is still paying subsidy in 2026-27. On 28 October 2026 it released ₹1,000 crore for 11,333 new units. As of 2 November 2026, a formal decision on the next five-year period had not been announced.
How much subsidy is given under PMEGP?
General category: 15% of the project cost in urban areas and 25% in rural areas. Special category (women, SC, ST, OBC, minorities, ex-servicemen and others): 25% in urban areas and 35% in rural areas. The most is ₹17,50,000 on a ₹50 lakh manufacturing project.
What is the maximum PMEGP loan amount?
The subsidy is given on a project cost of up to ₹50,00,000 for manufacturing and ₹20,00,000 for service or business. The bank lends 90% to 95% of the project cost. A bank may lend above these limits, but the extra part gets no subsidy.
What is the PMEGP loan interest rate?
PMEGP does not fix a rate. The bank charges its normal interest rate for business loans of that kind, which depends on the bank and on you. The subsidy is not an interest discount: it is a lump sum that reduces the loan after 3 years.
Who is eligible for PMEGP?
Any person above 18 years of age starting a new business. There is no income limit. You must have passed Class 8 for a manufacturing project above ₹10 lakh or a service project above ₹5 lakh. Self-help groups, registered societies, production co-operative societies and charitable trusts can also apply.
How much money do I need to put in myself?
10% of the project cost in the general category and 5% in the special category. On a ₹10 lakh project, that is ₹1,00,000 or ₹50,000.
Is EDP training compulsory for PMEGP?
Yes. You must finish Entrepreneurship Development Programme (EDP) training before the bank releases the loan. The implementing agency arranges it, in a classroom or online. It teaches basics like accounts, marketing and bank rules.
Is collateral needed for a PMEGP loan?
Under RBI rules, banks should not ask for collateral on loans to micro and small enterprises up to ₹10 lakh. Bigger PMEGP loans can be covered by a CGTMSE credit guarantee instead of collateral. The bank decides in each case.
How do I apply for PMEGP online?
Apply on the official portal pmegp.msme.gov.in. Register with your Aadhaar and mobile number, fill in the form, upload your project report and documents, and choose a bank. Applying is free. Do not pay any agent.
Can I get a second PMEGP loan?
Yes, to upgrade a unit set up under PMEGP, REGP or Mudra. You must have repaid the first loan on time and made a profit in each of the last 3 years. The subsidy is 15% (20% in the North East and hill states) on a project of up to ₹1 crore (manufacturing) or ₹25 lakh (service).