PMEGP

Prime Minister’s Employment Generation Programme (PMEGP)
1. The Scheme
The Government of India has approved the introduction of a new credit-linked subsidy programme called the Prime Minister’s Employment Generation Programme (PMEGP) by merging the two schemes that were in operation up to 31.03.2008, namely the Prime Minister’s Rojgar Yojana (PMRY) and the Rural Employment Generation Programme (REGP).
The objective of PMEGP is to generate employment opportunities through the establishment of micro enterprises in both rural and urban areas.
PMEGP is a Central Sector Scheme administered by the Ministry of Micro, Small and Medium Enterprises (MoMSME). The Khadi and Village Industries Commission (KVIC), a statutory organisation under the administrative control of the Ministry of MSME, is the single nodal agency at the national level.
At the State level, the Scheme is implemented through:
State KVIC Directorates;
State Khadi and Village Industries Boards (KVIBs);
District Industries Centres (DICs); and
Banks.
The Government subsidy under the Scheme is routed by KVIC through the identified banks for eventual distribution to the beneficiaries/entrepreneurs through their bank accounts.
In Delhi, where no DIC exists, the Scheme is implemented by the State Office of KVIC and KVIB throughout Delhi.
KVIC coordinates with State KVIBs, State DICs and other implementing agencies and monitors the performance of the Scheme in both rural and urban areas.

2. Objectives
The objectives of PMEGP are to:
Generate employment opportunities in rural as well as urban areas of the country through the establishment of new self-employment ventures, projects and micro enterprises.
Bring together widely dispersed traditional artisans, rural and urban unemployed youth and provide them with self-employment opportunities, to the extent possible, at their place of residence.
Provide continuous and sustainable employment to a large segment of traditional and prospective artisans and rural and urban unemployed youth in the country, thereby helping to arrest migration of rural youth to urban areas.
Increase the wage-earning capacity of workers and artisans and contribute to the growth rate of rural and urban employment.

3. Quantum and Nature of Financial Assistance
3.1 Level of Support under PMEGP
A. Setting up of New Micro Enterprises/Units
Category of Beneficiary
Beneficiary's Contribution (% of Project Cost)
Rate of Subsidy – Urban Areas
Rate of Subsidy – Rural Areas
General Category
10%
15%
25%
Special Category*
5%
25%
35%

* Special Category includes SC/ST/OBC/Minorities/Women/Ex-Servicemen/Persons with Disabilities (PwDs)/NER/Hill and Border Areas, etc.
Key Financial Limits
The maximum cost of the project/unit admissible for Margin Money subsidy under the manufacturing sector is ₹50.00 lakh.
The maximum cost of the project/unit admissible for Margin Money subsidy under the business/service sector is ₹20.00 lakh.
The balance amount of the total project cost, excluding the beneficiary's own contribution, will be provided by the banks.
If the total project cost exceeds ₹50.00 lakh for manufacturing or ₹20.00 lakh for business/service activities, the additional amount may be financed by banks without any Government subsidy.

3.2 Second Loan for Upgradation of Existing PMEGP/REGP/MUDRA Units
Category of Beneficiary
Beneficiary's Contribution (% of Project Cost)
Rate of Subsidy
All Categories
10%
15%
NER and Hill States
10%
20%

Key Financial Limits
Manufacturing Sector
Maximum admissible project cost: ₹1.00 crore
Maximum subsidy: ₹15.00 lakh
Maximum subsidy for NER and Hill States: ₹20.00 lakh
Business/Service Sector
Maximum admissible project cost: ₹25.00 lakh
Maximum subsidy: ₹3.75 lakh
Maximum subsidy for NER and Hill States: ₹5.00 lakh
The balance amount of the total project cost, excluding the beneficiary's own contribution, will be provided by banks.
If the total project cost exceeds ₹1.00 crore in the manufacturing sector or ₹25.00 lakh in the business/service sector, the additional amount may be financed by banks without any Government subsidy.
4. Eligibility Conditions of Beneficiaries
4.1 PMEGP for New Enterprises/Units
The following eligibility conditions apply:
Any individual above 18 years of age is eligible.
There is no income ceiling for assistance for setting up projects under PMEGP.
For projects costing more than:
₹10 lakh in the manufacturing sector, or
₹5 lakh in the business/service sector,
the beneficiary should possess at least an VIII Standard pass educational qualification.
Assistance under the Scheme is available only for new projects sanctioned specifically under PMEGP.
Existing units under PMRY, REGP or any other scheme of the Government of India or State Government, as well as units that have already availed Government subsidy under any other scheme of the Government of India or State Government, are not eligible.

4.2 Other Eligibility Conditions for New Units
Capital Expenditure
Projects without capital expenditure are not eligible for financing under the Scheme.
The cost of land should not be included in the project cost.
However, the cost of a ready-built as well as long-lease or rental work shed/workshop may be included in the project cost, subject to restricting such cost to a maximum period of three years.
Nature of Activities
PMEGP is applicable to all new viable micro enterprises, including Village Industries projects, except:
activities prohibited by the local Government/Authority on environmental or socio-economic grounds; and
activities included in the negative list of the Scheme guidelines.
Trading Activities
Business/trading activities may be permitted under the following circumstances:
Business/trading activities in the form of sales outlets may be permitted in:
North Eastern Region (NER);
Left Wing Extremism (LWE)-affected districts; and
Andaman & Nicobar Islands.
Retail outlets/businesses selling the following products may be permitted across the country:
Khadi products;
Village Industry products produced by Khadi & Village Industries Institutions certified by KVIC; and
Products manufactured by PMEGP/SFURTI clusters.
Retail outlets backed by manufacturing, including processing, or service facilities may be permitted across the country.
The maximum project cost for the above business/trading activities under categories (a), (b) and (c) may be ₹20 lakh, at par with the maximum project cost for the service sector.
A maximum of 10% of the financial allocation in a year in a State may be utilised for the above business/trading activities.

Family Eligibility
Only one person from one family is eligible to obtain financial assistance for setting up a project under PMEGP.
For this purpose, "Family" includes the self and spouse.

4.3 Eligibility for Upgradation of Existing PMEGP/REGP/MUDRA Units
For availing the second loan for upgradation, the following conditions must be fulfilled:
Margin Money subsidy claimed under PMEGP must have been successfully adjusted after completion of the prescribed three-year lock-in period.
The first loan under PMEGP/MUDRA/REGP must have been successfully repaid within the stipulated period.
The unit should be:
profit-making;
having good turnover; and
having potential for further growth in turnover and profit through modernisation/upgradation of technology.

5. Implementing Agencies
5.1 Primary Implementing Agencies
The Scheme is implemented by the Khadi and Village Industries Commission (KVIC), Mumbai, a statutory body constituted under the Khadi and Village Industries Commission Act, 1956.
KVIC functions as the single nodal agency at the national level.
At the State level, the Scheme is implemented through:
State Directorates of KVIC;
State Khadi and Village Industries Boards (KVIBs);
District Industries Centres (DICs); and
Coir Board for coir-related activities.
Other agencies may also be enrolled as Implementing Agencies (IAs), as and when necessary, including:
National Scheduled Tribes Finance and Development Corporation (NSTFDC);
National Backward Classes Finance and Development Corporation (NBCFDC);
Indian Institute of Entrepreneurship (IIE), Guwahati;
National Institute for Entrepreneurship and Small Business Development (NIESBUD);
National Institute for Micro, Small and Medium Enterprises (ni-msme);
Institute of Entrepreneurship Development, Odisha;
Tool Rooms and Technology Centres;
Office of the Development Commissioner (MSME); and
MSME Development Institutes (MSME-DIs).
All Implementing Agencies, including agencies enrolled in future, may receive and process applications across rural and urban areas, irrespective of the classification of the area.
KVIC will coordinate with State KVIBs, State DICs and other Implementing Agencies and monitor the performance of the Scheme in rural and urban areas.
The Implementing Agencies may also involve the following organisations in identification of beneficiaries:
National Small Industries Corporation (NSIC);
Udyami Mitras empanelled under Rajiv Gandhi Udyami Mitra Yojana;
RSETIs/RUDSETIs;
Panchayati Raj Institutions;
NGOs of repute; and
Other relevant agencies.
The Coir Board will be involved in identifying coir units for establishment under PMEGP in both rural and urban areas, as well as in their handholding and monitoring.

5.2 Other Agencies
The following agencies may also be involved in the implementation and support of PMEGP:
Department of Women and Child Development (DWCD);
Nehru Yuva Kendra Sangathan (NYKS);
Army Wives Welfare Association of India;
NGOs having at least five years' experience and expertise in:
project consultancy in small, agro and rural industrial promotion;
technical consultancy services;
rural development; and
social welfare;
Professional institutions and technical colleges recognised by the Government/University/UGC/AICTE;
Institutions providing vocational or skill-based training, such as:
ITIs;
Rural Polytechnics; and
Food Processing Training Institutions;
Certified KVI Institutions aided by KVIC/KVIB, provided they fall under Category A+, A or B and possess the required infrastructure, manpower and expertise;
Departmental and non-departmental training centres of KVIC/KVIB;
MSME Development Institutes, MSME Tool Rooms and Technology Development Centres under the administrative control of the Office of the Development Commissioner (MSME);
NSIC offices, Technical Centres, Training Centres and Incubation Centres established under PPP models;
National-level Entrepreneurship Development Institutions, including:
NIESBUD;
ni-msme;
Indian Institute of Entrepreneurship, Guwahati;
their branches; and
Entrepreneurship Development Centres established by partner institutions;
PMEGP Federation, whenever formed; and
Any other agency approved by the competent authority.

6. Financial Institutions
The following financial institutions are eligible to participate in PMEGP:
All Public Sector Banks;
All Regional Rural Banks (RRBs);
Cooperative Banks;
Private Sector Scheduled Commercial Banks regulated by the RBI; and
Small Industries Development Bank of India (SIDBI).

7. Identification of Beneficiaries
The identification of beneficiaries will be undertaken at the District level by Implementing Agencies and Banks.
Banks should be involved from the beginning of the process to ensure that bunching of applications is avoided.
Applicants who have already undergone training of at least:
10 days under offline mode, or
60 hours under online mode
under EDP, Skill Development Programme (ESDP) or vocational training are not required to undergo EDP training again.
Priority will be given to persons affected by natural calamities/disasters in areas declared as affected by a "Disaster" under Section 2(d) of the Disaster Management Act, 2005, by the Ministry of Home Affairs.
Exaggeration of project costs merely with the objective of availing a higher amount of subsidy should not be permitted.
KVIC, in consultation with the Bankers' Association, has devised a Scoring Model/Score Card for appraisal of PMEGP proposals. The model is used by Implementing Agencies for appraisal and subsequent forwarding of applications/proposals to banks.
The scoring model is displayed on the websites of KVIC and the Ministry of MSME.

8. Bank Finance
8.1 Bank's Share
The Bank will sanction:
90% of the project cost in the case of General Category beneficiaries/institutions; and
95% of the project cost in the case of Special Category beneficiaries/institutions.
The sanctioned amount will be disbursed suitably for setting up the project.

8.2 Nature of Bank Finance
Banks may finance:
Capital expenditure through a Term Loan;
Working capital through Cash Credit; or
Both through a Composite Loan consisting of capital expenditure and working capital.

8.3 Maximum Project Cost and Working Capital
The maximum project cost under PMEGP is:
₹50 lakh for manufacturing units; and
₹20 lakh for service/trading units.
This includes both the Term Loan for capital expenditure and working capital.
Working Capital Limits
For manufacturing units:
Working capital should not exceed 40% of the project cost.
For service/trading units:
Working capital should not exceed 60% of the project cost.
However, where the capital expenditure reaches the maximum ceiling of the project cost for manufacturing/service sector units, banks may consider sanctioning additional funds over and above ₹50 lakh and ₹20 lakh, respectively.
Such additional funds over and above the prescribed ceilings will not be covered for subsidy.
Adjustment of Excess Margin Money Subsidy
If, at the end of the third year from commencement of production, the actual capital expenditure and working capital expenditure are less than the sanctioned bank loan amount, including the beneficiary's own contribution, the excess Margin Money subsidy corresponding to the shortfall shall be refunded to KVIC.

8.4 Rate of Interest and Repayment Schedule
The normal rate of interest applicable to the bank shall be charged.
The repayment period may range from 3 to 7 years, after an initial moratorium as prescribed by the concerned bank/financial institution.
RBI has issued necessary guidelines to banks to accord priority to sanctioning projects under PMEGP.
RBI may issue suitable guidelines from time to time regarding the RRBs and other banks that are eligible or excluded from implementing the Scheme.

9. Definition of Industry and Employment Criteria
For the purpose of PMEGP, an eligible industry means any industry, except those included in the negative list, located in a rural or urban area that:
produces any goods; or
renders any service,
with or without the use of power.

The fixed capital investment per head of a full-time artisan or worker should not exceed:
Area
Maximum Fixed Capital Investment per Full-Time Worker
Plain Areas
₹3.00 lakh
Hilly Areas
₹4.50 lakh

The calculation is based on:
Capital expenditure on workshop/workshed, machinery and furniture ÷ Full-time employment created by the project.

10. Rural Areas
For the purpose of PMEGP, rural areas include:
Any area classified as a village as per the revenue records of the State/Union Territory, irrespective of its population.
All areas, irrespective of their population, falling under Panchayati Raj Institutions will be treated as rural areas.
Areas falling under a Municipality will be treated as urban areas.

11. Online Application and Fund Flow Process

11.1 Mandatory Online Application
Online application is mandatory under PMEGP. Manual applications are not permitted.
The PMEGP Portal has been developed and operationalised by KVIC.
Applications for:
new projects; and
upgradation/expansion of existing eligible units
are required to be submitted only through the PMEGP Portal.

11.2 Separate Application Forms
Separate online application forms are available on the PMEGP Portal for:
Individuals applying for setting up new units; and
Applicants seeking upgradation of existing units.

11.3 User ID, Password and Application ID
At the time of initial registration/application filing:
The applicant is provided with a User ID and Password for tracking the status of the application.
Upon final submission, the applicant is provided with a unique Application ID.
The Application ID can be used to track the status of the application.

11.4 Aadhaar Authentication
The applicant's Aadhaar number is mandatory and is authenticated against the UIDAI database before the applicant proceeds with filling the application.
For individuals who have not been assigned an Aadhaar number:
the individual may apply for Aadhaar enrolment; and
furnish the Aadhaar enrolment number.
In certain areas, including NER and J&K, where an individual has not been issued Aadhaar, an alternate and viable means of identification, such as a PAN Card, may be accepted for availing benefits under the Scheme.

11.5 Uploading of Documents
The applicant is required to upload the photograph and documents necessary for screening the application.
These may include:
a. Caste Certificate;
b. Special Category Certificate, wherever applicable;
c. Rural Area Certificate;
d. Project Report;
e. Education/EDP/Skill Development Training Certificate; and
f. Any other applicable document.

11.6 Submission of Application
The applicant is required to:
Fill in all relevant information in the prescribed online application form.
Save the application.
Receive the User ID and Password on the registered mobile number.
Upload all required documents.
Complete the eligibility-related information.
Obtain the self-assessed score generated based on the information provided.
Complete the required documentation.
Make the final submission.
Receive the unique Application ID.
Track the status of the application using the Application ID.
Download and print the acknowledgement as proof of submission.

After final submission, the complete set of application documents is electronically forwarded to the representatives of the applicant's preferred Implementing Agency (IA) for further processing.