Prime Minister`s Employment Generation Program (PMEGP)

What is Prime Minister Employment Scheme?

 

This scheme is the result of the merger of earlier two earlier schemes, Prime Minister`s Rojgar Yojna (PMRY) and Rural Employment Generation Program (REGP).

 

Objective

 

• Generate the employment opportunity in rural as well as in urban areas. This purpose has to meet through the establishment of new micro-enterprise /self-employed ventures/projects in rural as well as in the urban areas.
• To bring together scattered artisans/rural and urban unemployed youth and to give them the employment opportunity at their place
• To provide continuous and sustainable employment to the traditional/prospective artisans and rural and urban unemployed youth so that migration can be stopped.
• To help artisans in increasing the wage-earning capacity so that they can contribute to the growth rate of urban and rural employment.

 

When was PMEGP started? 

PMEGP started in 2008.

Who is monitoring the scheme?

 

PMEGP is the central Government scheme. Ministry of Micro, small and medium enterprise is monitoring the scheme

 

Implementing /Nodal Agency

 

 At the national level, the Nodal/Implementing Agency of this scheme is Khadi and Village Industries Commission (KVIC) Mumbai. At the state level, State KVIC directorates, State Khadi and Industries boards, and State khadi and village industries Boards (KVIBs) will implement at the state level and District Industries Centers (DICs) will implement at the rural level. Banks have been assigned to implement the scheme. KVIC routs government subsidy directly into the bank account of beneficiary/Entrepreneur through designated banks.

For the identification of the beneficiaries, for getting the area- specific viable projects, providing training, in the internship, handholding and mentoring of the beneficiaries Implementing agency like KVIC/ KBIBs/DICs align with reputed institutions like self- help groups (SHGs)/National small Industries Corporation (NSIC)/Udami Mitra impaneled under Rajiv Gandhi Udami Mitra yojna (RGUMY)/RSETIs/RUDSETIs/Panchayati Raj Institution and other relevant bodies.

 

What is PMEGP loan limit? 

• The maximum cost of the project will be 25 lakh in the manufacturing sector and 10 lakh under the business/service sector

• Out of the total cost the applicant will have to bear 5% of the project cost in case of in the special category ( including SC/ST/OBC/Minority/Ex-servicemen/Physically handicapped/NER/Border areas etc ) and 10% in case of the general category.

• The Balance amount of the total project cost will be provided by the bank as project cost. 

How much margin money (Government Subsidy) is available? 

The Subsidy will be available as below-

Category	Urban	Rural
General	15%	25%
SC/ST/Minority/OBC/Women/ Ex.Service men/Physically handicapped/NER/Hill and boarder areas etc	25%	35%

 

  

Who can avail of the scheme?

 

Individual/Group of individual entrepreneurs, Institutions, Cooperative societies, self-help groups, or trusts can avail this scheme.

 

Which are the disbursing agencies?

 

27 Public sector banks, Regional Rural Banks (RRB), Co-operative banks(approved by state-level task force committee), Private scheduled commercial banks approved by respective task force committee, Small Industries Development Bank of India can disburse the loan.

 

How can I create a project in a PMEGP loan?

 

Please follow the following step:

• Choose an idea of Interest to start a business in the manufacturing or service sector
• Identify suitable location/building/Plant( for good location extra marks are there) you may refer to in marks chart in this article.
• Make a project/business report ( Model business detail has been provided in this article. You may refer to that)

 

 

Which business comes under PMEGP?

 

The Whole list of PMEGP approved model business lists is available on the KVIConline website. You may find the complete list of businesses here.

 

What are the potential projects? 

 

You may find the potential project here  

 

Negative list of businesses that will not be funded under PMEGP

 

The following list will not be allowed under PMEGP

• Any Industry/Business connected with Meat
• Production/Sale of intoxicant item like Beedi/Gutka/Pan/Cigar/Cigarette
• Any Sales outlet serving Liquor
• Manufacturing of Polythene carry bag of fewer than 20 microns

 

What is the minimum qualification for a PMEGP loan?

 

Applicant should have passed the 8th class examination.

 

What should be the age limit of the beneficiary? 

Any adult above the age of 18 years is eligible for funding under the PMEGP.  

Eligibility criteria for new units 

• Applicant should have more than 18 years of age
• There is no income ceiling for availing of the benefit under PMEGP
• Applicant should have at least 8th class pass for applying the project costing 10 lakh in the manufacturing sector and 5 lakh in business/service sector
• Subsidy under PMEGP is available for new projects.
• Self-help groups including BPL cardholders can also apply under this scheme provided they have not availed subsidy in any other schemes.
• Society registered under society registration act 1860/Charitable trust can also avail the scheme.
• Any existing unit under PMRY or any other scheme will not be eligible for the loan.
• A Project without capital expenditure will not be qualified for this scheme.
• Any project valued less than 5 lakh which doesn’t require working capital needs to be cleared from the regional office or the controller of the bank`s branch. Any such claim should be submitted with a certified copy of approval from the regional office or the controller of the bank`s branch.
• All new viable micro-enterprise, including village industries projects except activities prohibited by local Government/Authorities keeping in view environment or socio-economic factors and activities keeping in view environment or social-economic factors and activities indicated in the negative list of the guidelines, can avail the PMEGP scheme.
• Any institution /Cooperative Societies/Trusts specifically registered as in special category like SC/ST/OBC/Minority/women/physically handicapped/ex-serviceman. They have done necessary mention in their by-laws then these societies will be eligible for subsidy under a special category else they will be eligible for the subsidy in the general category.
• Only one member from the family (self or spouse) will be eligible under the PMEGP scheme. 

What is the main criterion of the project?

 

It should fulfill the following condition:

• It should full fill the terms and conditions of the rural area project (in case the project is of the rural area)
• Per capita investment
• Own investment of the beneficiary
• The Project should not be from the negative list
• The Proposed unit should be the new one

 What all will be considered in the project cost?

 

Project cost will include capital expenditure loan, applicant`s share of one cycle of working capital, and 10% of the project cost in case of general category or 5% in the case is of from the weaker section.

 

How the Loan amount/Cash credit limit is utilized?

 

Working capital of beneficiaries should touch 100% limit of cash credit within three years of the lock-in period at least once and it should be 75% utilization of the sanctioned limit on average.

 

Documents required

 

• Cast certificate (if any)
• Special category certificate, Where ever it is required
• Rural area certificate
• Project report
• Education/EDP/Skill development training certificate
• In case of institution self-attested copies of registration certificate, authorization letter/copy of bylaws authorizing the secretary to apply, certificate to special category (if any) will be required.

 

Is collateral Security a must?

 

No, collateral security is not needed from the beneficiary. As per the RBI guidelines, Credit guarantee fund trust for micro and small enterprise (CGTSME) will give the collateral for the loan more than 5 lakh and up to 25 lakh

 

How much own contribution has to be deposited?

 

10% for general category and 5 % for special category (including SC/ST/OBC/Minority/ Ex-servicemen/Physically handicapped/NER/Border areas etc) needs to be contributed towards own share of contribution.

 

Where the applicant has to submit the application?

 

Applicants can submit applications/project online on KVIC website

 

 

What is DIC in PMEGP?

 

DIC(District Industries center ) has to play a very major role in PMEGP.DIC is an implementing agency along with KVIC(Khadi and Village Industries Commission and KVIB(Khadi and Village Industries Board)

 

Can an unemployed person get a loan?

 

Yes under this scheme loan is collateral-free. So unemployed can also get a loan.

 

 

How do I adjust the PMEGP subsidy?

 

PMEGP subsidy can be adjusted at the end of 3 years.

 

Loan for upgrading the existing PMEGP/MUDRA units

 

• The maximum cost of the project will be 1 crore in the manufacturing sector and 25 lakh under the business/service sector
• In this category, the maximum subsidy will be 15 lakh (20 lakh will be for NER and Hill states)
• The balance amount of the total project will be funded by the bank as a term loan. 

Other activities covered under this scheme

 

Business/trading activities

• Business/trading activities in the sales outlet can be allowed in NER, LWE affected districts, and A&N Islands.
• Retail outlet/business selling khadi products/Village Industry products which are purchased from khadi and village Industries institution approved by KVIC and manufactured by PMEGP/SFURTI units only can be permitted under this scheme across the country. The maximum cost of this kind of business /trading activitiy will be 10 lakh and it will be at par with the service sector.

Transport activities

Under this category purchase of Cab/Van/Motor/Boat/Shikara etc for the transportation of tourist or the general public is allowed. A ceiling of 10% will be applicable in this category except for NER, Hilly region, LWE affected districts and A&N island and Goa, Puducherry, Daman and Diu, Dadra Nagar haveli,J&K, Lakshadeep 

Eligibility criteria for the up- gradation of existing MUDRA/PMEGP units 

• Margin money claimed under PMEGP should have been already adjusted.
• The first loan under this PMEGP/MUDRA should have been repaid in time.
• Said unit should be in the profit with good turnover and it should have a potential to further upgrade in turnover and profit.

 

What is the village industry?

 

Any village industry (excluding those which are on the negative list) which is located in the rural area which produces goods or provides services will be called village industry. It should have fixed the capital investment for the head of full time of artisan or workers don’t exceed one lakh in case of the plain area and 1.5 lakh in case of hill area and in the case of A&N island and Laxdeep 4.5 lakh.

What is Rural Area?

The area will be called rural if it is in the revenue record of the state irrespective of the population and also the town which has a population less than 20000.

Is EDP training is must for claiming the Margin Money Subsidy?

Yes EDP Training is for 10 days for the project costing more than 5 lakh and for 6 working days training for the project costing up to 5 lakh is a must for the beneficiaries who would like to claim margin money subsidy.

 

How can apply for EDP Training?

 

Follow the following step for EDP Training

• Get the application ID
• Registered mobile number
• Visit the website Click on “ EDP for PMEGP beneficiary
• Choose the course
• Click on Register
• Fill in the required detail.
• Once registered, login and fill required detail. 

Can the unit be set up in an urban area?

 

Yes, it can be set up in the urban area but through the district Industries Center (DIC) only.

 

What is the lock-in period of Government Subsidy?

 

The Lock-in period of Government subsidy is of 3 years.

 

Can the project be financed by two funding sources at the same time?

 

No. Under this scheme no sub funding is available.

 

 The Identification of the beneficiaries

 

Beneficiaries will be identified at the district level. This will be done by the state/District level agencies KVIC/State KVIB and state DICs and banks etc. Banks should be involved from the beginning itself so that unnecessary bunching of the applicants should be avoided. Applicants who have already done the training of two weeks under entrepreneurship development program (EDP)/Skill development program (SDP)/ Entrepreneurship cum Skill development program(ESDP)/Vocational training (VT) no need to go for training again and also they should be given the priority in selection.

Bank Finance

• Bank will sanction 95% of the project cost in the case of special category/Institution and 90% in the case of general category/Institution. Bank will disburse the full amount appropriately for setting up a project.
• Beneficiaries will be given capital expenditure as term loans and working capital as cash credit. Bank can also give the amount in the project as a composite loan consisting of capital expenditure and working capital
• The Maximum project cost under PMEGP is 25 lakh including a term loan for capital expenditure and working capital. Share of working capital should not be more than 40% of the project cost in the case of manufacturing units and should not be more than 60% of the project cost in the case of the service/trading sector. In the case of manufacturing units, the project cost may include a maximum capital expenditure of up to 25 lakh. in that scenario, working capital over 25 lakh will not be covered under the subsidy. 

Rate of Interest and repayment schedule

 

• The Prevailing market rate will be charged.
• The Repayment payment schedule will be for 3-7 years
• The Initial moratorium may be prescribed by the concern financial institution.

 

Modalities of the online process flow of application:

 

• The Project proposal will be invited from potential beneficiaries at the district level through print media, radio, and other media at periodical intervals.
• Panchayati raj institutions will also publish the scheme and help in the identification of the beneficiaries.
• The application will be filled in online mode only. This facility is available for individual as well as institutional applicants.

 

Task Force

 

A task force with the following members will be constituted at the district level for monitoring the progress of the PMEGP scheme.

 

District Magistrate/Depty Commissioner/Collector	Chairman
PD-DRDA/EO-Zila Panchayet	Vice Chairman
Lead Bank Manger	Member
Repersentative of KVIC/KVIB/DIC	Member
Representative of NYKS/SC/ST Corporation	Special Invitee
Representative of MSME-DI,ITI/Polytechnic	Special Invitee
Representative from Panchayat( it has to be nominated by Chairman/District Magistrate/Deputy Commissioner/Collector by rotation	3 members
Director RSETI/RUDSETI	Member
General Manager, DIC of the district	Member convener

 

 

 

Scorecard for disbursement of the loan

Personal Details of the applicant need to be provided. In the case of the institution personal details of the main promoter should be provided.

 

Sr No	Parameters	Maximum Marks	Marks scored	Criteria	Marks
1	Age	6		25 to 40	6
				18 to 24	5
				41 to 49	3
				50 & above	2
2	No of Dependents	2		Upto 3	2
				>3	0
3	Owing a house/Parental House	5		yes	5
				No	2
4	Residing at the same location	5		5 years and above	5
				2-5 years	3
				Less than 2 years	2
5	Academic Qualification	4		Graduation	4
				Intermediate or more	3
				Metric	2
				Below Metric	1
6	Experience in the line of trade	8		=>3 years	8
				1 to 3 years	6
				<1 year	3
				Nill	0
7	Any other source of Income incl.family	5		yes	5
				No	0
8	Assessed for Income tax	2		Assessed	2
				Not assesed	1
9	Have life Insurance Policy(PMSBY,PMJJBY,APY or any other insurance policy)*Point 1 for each max 3	3		yes	*
				No	0
10	Marks Scored	40

 

 

 

 

 

 

Scorecard for New Venture /Firm for disbursement of the loan

 

Sr No	Parameters	Maximum Marks	Marks scored	Criteria	Marks
1	Relationship with lending bank	5		Above 3 years	5
				1 to 3 years	3
				< a year	2
				New	1
2	Credit History	5		Very Good	5
				Satisfactory	4
				No history	3
3	Location advantage(Availability of infrastructure ,raw materials,labour proximity to market etc	5		yes	5
				No	3
4	Skill certification course/RSETI/ITS/Computer knowledge	5		yes	5
				No	2
5	Market tie ups for the sale of products	5		yes	5
				No	2
6	Line of activity	5		Mfg/Service	5
				trade and others	3
7	Registered with government authorities viz for sales tax/vat/license from local bodies/shop act etc	5		yes	5
				No **	3
8	Re payment period (Not applicable for only working capital loans)	5		Upto 5 years	5
				Above 5 years	3
9	Employment Generation	5		Above 5	5
				3 to 5	3
				Self Employed	2
10	Avg DSCR (Not applicable for only working capital loans)	5		> 2 Years	5
				1.5. to 2	3
				<1.5	2
	Marks scored	50
	**	It should be completed.

  

 How can apply for the loan

 

• Visit the official website of KVIC
• Then click on PMEGP.
• New page will open up
• Click PMEGP Portal
• Click on online application form for the individual/ Nonindividual
• A new page will open up. Fill in all the required detail.
• You will get a user ID and password
• At the time of final submission of the form, you will be provided the application ID
• Applicant Aadhar number will be preferred. If the applicant is an Institution then the authorized person will furnish his/her Aadhar detail.
• After filling the application and uploading all the required documents click the summit. Once you submit then your application along with all the documents will be forwarded to the district representative of KVIC, District representative of state KVIB and District Industries center of the concerned district
• After receiving the documents within 5 working days Nodal officer of KVIC, State KVIB, and DIC will speak to you personally through phone or personal meeting. They will confirm that you have submitted the application for scrutiny. With your consent/consultation, the nodal officers do all the necessary corrections in your application. The nodal officer will provide the hand-holding at every stage of the funding.
• The implementing agencies after primary scrutiny of the application will forward the complete/corrected application to the financing bank which has been chosen by you. Copy of your complete application will also go to the lead bank manager for information and monitoring.

·         The application will be forwarded to the bank within 3 weeks of forwarding by the  

Implementing agency

 

 

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