PMEGP loan and subsidy: eligibility, subsidy rates and how to apply

Updated 30 October 2026 · ImportGap guides

The Prime Minister's Employment Generation Programme (PMEGP) helps first-time entrepreneurs set up new micro units with a bank loan plus a government subsidy that does not have to be repaid. It is run by KVIC with state KVIBs and District Industries Centres.

Key numbers

Item	Manufacturing	Service / business
Maximum project cost	₹50 lakh	₹20 lakh
Subsidy, general category	15% urban, 25% rural	15% urban, 25% rural
Subsidy, special categories*	25% urban, 35% rural	25% urban, 35% rural
Own contribution	10% general, 5% special	10% general, 5% special

*Special categories include SC/ST, OBC, minorities, women, ex-servicemen, persons with disabilities, transgender persons, and applicants from the North-East, hill and border areas. The rest of the project cost is a bank loan.

Eligibility

Individuals above 18 years; also self-help groups, societies and trusts.
Minimum 8th pass for projects above ₹10 lakh (manufacturing) or ₹5 lakh (service).
Only new units. Existing units and those that already received a government subsidy are not eligible (a separate upgrade loan exists for successful PMEGP units).

How to apply

Prepare a short project report: product, machinery, costs, expected sales.
Apply online on the PMEGP e-portal and choose the agency (KVIC, KVIB or DIC).
The agency's task force interviews you and forwards the application to a bank.
After the bank sanctions the loan, complete the mandatory entrepreneurship training (EDP).
The subsidy is held by the bank and adjusted against the loan after the unit has run successfully for three years.

Rates and limits are as published by KVIC and state governments in 2025–26. Confirm on the PMEGP portal before applying.

Frequently asked questions

Does the PMEGP subsidy have to be repaid?

No. It is margin money held by the bank and adjusted against the loan after three years of successful operation.

Can I apply for PMEGP for an existing business?

No. PMEGP is for new units. Existing PMEGP units can apply for a second, upgrade loan.

Is collateral needed for a PMEGP loan?

Banks are advised not to ask for collateral on PMEGP loans up to ₹10 lakh, and larger loans are usually covered by a CGTMSE guarantee. Your bank will confirm what applies.

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