Prime Minister’s Employment Generation Programme (PMEGP)- II

By | March 10, 2019

Prime Minister’s Employment Generation Programme (PMEGP)- II

(…continued from Prime Minister’s Employment Generation Programme (PMEGP)- I )

(updated on 16.08.2020)

Eligible activities:

  • Normally, manufacturing and services activities are only permitted under PMEGP. However, trading activity is also permitted if the unit is,

    • established in North-East region, LWE-affected districts and Andaman & Nicobar islands.

    • a retail outlet/business selling Khadi Products, Village Industry projects procured from Khadi and Village Industry Institutions certified by KVIC and products manufactured by PMEGP/SFURTI units only may be permitted under PMEGP (across the country).

    • For these two categories maximum cost of project is Rs. 10 lakhs.

    • For the list of permitted activities / illustrative list of activities please go through ‘Illustrative list of activities‘.

Ineligible activities / prohibited activities :

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

  • 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. Serving/selling non-vegetarian food at Hotels/Dhabas will be allowed.

  • 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. Off Farm / Farm Linked activities in connection with sericulture, horticulture, floriculture etc. will also be allowed.

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

  • 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 problems.

  • Any other activity which is prohibited by state government / local government

Which banks / financial institutions can finance ?

  • All Public sector banks and Regional Rural Banks.

  • State level Task force committee approved co-operative banks and private sector banks.

  • Small Industries Development Bank of India (SIDBI).

Process of applying for assistance under PMEGP :

  • Each district will be given a target for these proposals and as per the target given to them, KVIC, KVIBs and DICs invite project proposals from prospective beneficiaries at district level by advertising in press, radio and other channels at periodical intervals. Further, the scheme will also be advertised /publicized through the Panchayati Raj Institutions. These institutions can also identify beneficiaries.

  • Application to be submitted online ONLY. Separate PMEGP e-portal has been developed and put into operation by KVIC. Applications for new projects under PMEGP will be filed and submitted only through the said PMEGP e-portal.

  • There are two separate applications for online application. These are for

      • individuals

      • institutional applicants.

  • Each applicant will be provided with User ID and Password at the time of initial registration i.e. application filing and each application will be provided with a application ID on final submission.

  • Aadhar number of the individual in case the applicant is an individual and if the applicant is an institution then the Aadhar number of the authorised person is preferred.

  • Applicant can upload photo and other relevant documents which are required for screening the application.

  • Some of the documents which needs to be uploaded are:

    • Caste and Special Category Certificate, wherever required.

    • Rural Area certificate.

    • Project Report

    • Education / EDP/Skill Development training certificate

    • If the applicant is an institution then the following documents are needed to be uploaded:

      • Registration certificate of the firm

      • Authorization letter/copy of bye-laws authorizing Secretary etc. to apply.

      • Certificate for Special Category, wherever required.

  • Once the required documents are uploaded and on final submission the entire set of documents and application form will be electronically forwarded to the District Representative of KVIC, District Representative of State KVIB and the District Industries Center of the concerned District.

  • After the preliminary scrutiny of the application, the District level Agencies i.e. KVIC/KVIB/DIC will forward the final application form to the DLTFC as well as to one of the Financing Bank opted by applicant and the Lead Bank Manager (LBM) simultaneously.

  • The completed applications will be scrutinized by a District level task force committee. The committee consists of,

    • Dist Magistrate/Deputy Commissioner/Collector – Chairman

    • PD – DRDA / EO – Zilla Panchayat – Vice Chairman

    • Lead Bank Manager – Member

    • Representative of KVIC/KVIB/DIC – Member

    • Representative of NYKS/SC/ST Corporation – Special Invitee

    • Representative of MSME-DI, ITI/Polytechnic – Special Invitee

    • Representative from Panchayat – 3 members (To be nominated by Chairman/District Magistrate/ Deputy Commissioner/ Collector by rotation)

    • Director RSETI/RUDSETI. – Member

    • General Manager, DIC of the District – Member Convener

  • General Manager, District Industries Center (DIC) will be the Convener of DLTFC and he will place all the applications received till date before the DLTFC. The DLTFC may call the applicant for personal interaction/interview.

  • Once the application is received at the Bank (opted by the applicant), the Bank Bank will appraise the projects and take their own credit decision on the basis of viability of each project. They will appraise projects both technically and economically after ensuring that each project fulfills inter alia the criteria of

      • Industry

      • Per-capita Investment

      • Beneficiary contribution in the project (margin )

      • Area (projects sponsored by KVIC/ KVIBs/DICs) and

      • Negative List (mentioned above ).

  • If found eligible,

      • Bank will sanction 90% of the project cost in case of general category beneficiary / institution and 95% in case of special category beneficiary / institution.

  • Bank finance consists of Term loan and Working capital or Composite Loan. Term loan is for Capital expenditure and working capital is for working of the unit.

  • Maximum project cost under PMEGP is Rs.25 lakh. The project cost includes Term loan for Capital Expenditure and Working Capital. 

  • Even though the subsidy claimed by Banks is based on the projected capital expenditure, subsidy on the actual availment of Capital Expenditure only will be retained and excess, if any, will be refunded to KVIC.

  • Maximum repayment of the loan can be up to 7 years after moratorium.

  • Once the loan is sanctioned ,the applicant should deposit his own contribution and copy of EDP training certificate with photo and Aadhar number to the financing bank.

  • After signing the loan documentation depending on the project implementation schedule Bank will release the installment(s).

  • Once the subsidy is received from government, financing bank will deposit the same in a Term deposit receipt account and it will be appropriated to the loan account at a later date.

  • To provide orientation and awareness pertaining to various managerial and operational functions like production, finance, marketing, management, banking, accounting etc. an Entrepreneurship Development Programme (EDP) is a training programme will be organised. The duration of the training would be for at least 5 days for projects with project cost upto Rs.10 lakhs and for project with cost above Rs.10 lakhs, the duration of EDP would be at least 10 days.

  • KVIC, KVIB Training Centers, Training Centers run by Central Government, NIESBUD, NSIC, IIE,and NIMSME, Rural Development and Self Employment Training Institutes (RUDSETI), State Governments, reputed NGOs identified by the Government etc. organinse the EDP. 

  • This EDP is mandatory for all the PMEGP beneficiaries. However, they need not wait for sanction of loan but can undertake EDP training at any time after submission of the application form in consultation with State office of KVIC on payment of EDP charges.

  • The Subsidy that the Government is providing is a ‘one time assistance’. Normally, while availing credit enhancement, subsidy will not be available. However, 2nd subsidy is available for those units which are selected for upgradation through 2nd loan under this scheme, The criteria for selection for up gradation is

      • Subsidy claimed under earlier PMEGP has been successfully adjusted.

      • First loan availed under PMEGP/MUDRA has been successfully repaid in the stipulated time.

      • The unit is is profit making with good turnover and having potential for growth in turnover and profit with modernization/upgrading the technology.

  • For such units maximum project cost for upgradation under manufacturing sector is Rs. 1 crore and for business / service sector is Rs. 25 lakhs and maximum permitted subsidy is Rs. 15 lakh.

  • Once the loan is sanctioned 100% physical verification of the actual establishment and working status of each of the units, set up under PMEGP, including those set up through KVIBs and DICs, will be done by KVIC, through the agencies of State Government and/or, if necessary by outsourcing the work to professional institutes having expertise in this area, Banks.

These are important / basic information regarding Prime Minister Employment Generation Programme (PMEGP). For any clarifications / support / guidance please do write to us at or post a comment here.

All the best

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