PMEGP is the central government's margin-money subsidy scheme for new micro enterprises: a bank funds the project and the government pays 15–35% of the cost as a subsidy that is adjusted against the loan after three years. It covers projects up to ₹50 lakh in manufacturing and ₹20 lakh in services, for new units only.
The subsidy is 15% in urban and 25% in rural areas for general-category applicants, and 25% / 35% for women, SC/ST, OBC, minorities, ex-servicemen and persons with disabilities. The applicant contributes 5–10% of the project cost; the bank finances the rest.
Anyone over 18 can apply; projects above ₹10 lakh (manufacturing) or ₹5 lakh (services) need a Class VIII pass. Existing units and pure trading are excluded; a second, larger loan is available to upgrade a running PMEGP unit. Udyam registration is required before the margin money is settled.
Applications go through the KVIC portal to a bank of your choice; the decision rests on the project report, which is where most applications are won or lost.
Reviewed to the law in force in FY 2026-27. General information, not advice — confirm the position for your facts before acting.
