PMEGP Subsidy: Up to 35% Margin Money for New Units

The Prime Minister's Employment Generation Programme (PMEGP) is the Central Government's flagship subsidy for setting up brand-new micro-enterprises. Administered through KVIC and implemented by banks, it gives you a direct margin-money subsidy on your project cost — money that does not have to be repaid once your unit runs successfully for three years.

The subsidy ranges from 15% to 35% of project cost. In urban areas, general-category applicants receive 15% and special categories (SC/ST, OBC, minorities, women, ex-servicemen, and others) receive 25%. In rural areas, the same applicants receive 25% and 35% respectively. Manufacturing projects can go up to ₹50 lakh and service projects up to ₹20 lakh, with the subsidy calculated on the sanctioned project cost.

Eligibility is deliberately narrow: the unit must be new — existing businesses or units that have already availed any government subsidy do not qualify. Individual applicants must be above 18, and for manufacturing projects above ₹10 lakh (or service projects above ₹5 lakh) you need at least an 8th-standard pass. Your own contribution is just 5–10% of the project cost; the bank finances the rest as a composite loan.

Chhattisgarh adds a second layer on top. The state's own Margin Money Subsidy offers 25% (up to ₹100 lakh) for special categories including SC/ST and women entrepreneurs — applicable also for startups. Used together with PMEG's central subsidy where rules permit, the effective capital you need to bring to a new unit drops sharply.

The application runs through the KVIC e-portal: you prepare a detailed project report, apply online, and the bank appraises and sanctions the composite loan. The subsidy is kept in a fixed deposit for three years and adjusted against your loan once the unit proves viable.

See how PMEGP compares with every other state and central incentive in our complete 44-incentive classification table.

Want to know whether your project qualifies and how much subsidy it can realistically claim? Request a callback and a senior consultant will review your case within one business day.