The Prime Minister's Employment Generation Programme (PMEGP) is one of India's flagship initiatives to promote self-employment and entrepreneurship, particularly in rural and urban micro-enterprises. Launched in 2008 by merging the Prime Minister's Rojgar Yojana (PMRY) and Rural Employment Generation Programme (REGP), PMEGP continues to empower aspiring entrepreneurs in 2026. Administered by the Ministry of Micro, Small and Medium Enterprises (MoMSME) and implemented nationally by the Khadi and Village Industries Commission (KVIC), the scheme provides credit-linked subsidies to help individuals set up new businesses in the non-farm sector.
As of January 2026, PMEGP remains active under its extended guidelines for the period up to FY 2025-26, with an outlay of over ₹13,554 crore aimed at supporting around 4 lakh projects and generating millions of jobs. The scheme offers collateral-free loans for projects up to certain limits, with government subsidies reducing the repayment burden significantly. For manufacturing units, project costs can go up to ₹50 lakh, while service or business sectors allow up to ₹20 lakh, making it accessible for a wide range of ventures like food processing, handicrafts, retail outlets selling Khadi products, and eco-friendly services.
In 2026, the focus remains on inclusivity, with higher subsidies for special categories including women, SC/ST, OBC, minorities, ex-servicemen, differently-abled persons, and those in hilly, border, or North Eastern regions. This article provides a comprehensive guide to the PMEGP Scheme 2026, covering eligibility, benefits, application process, guidelines, and tips for success.
{tocify} $title={Table of Contents}
What is the PMEGP Scheme?
PMEGP is a central sector, credit-linked subsidy programme designed to generate sustainable employment opportunities through the establishment of micro-enterprises. It targets first-time entrepreneurs by providing bank loans backed by government margin money (subsidy). The subsidy acts as a grant, locked in for three years and adjusted against the loan principal after successful project verification.
 |
| PMEGP Scheme 2026 |
The scheme excludes agricultural activities and certain restricted businesses (negative list includes meat processing, alcohol/tobacco production, plastic carry bags below certain thickness, and activities violating environmental norms). Eligible activities span village industries, manufacturing, and services, with special encouragement for Khadi and eco-friendly products.
Key Highlights of PMEGP Scheme 2026
| Highlight | Details |
|---|---|
| Scheme Duration | Extended till 2025-26 (active in 2026) |
| Max Project Cost |
₹50 Lakh (Manufacturing) ₹20 Lakh (Service/Business) |
| Subsidy Rates |
General: 15% (Urban), 25% (Rural) Special*: 25% (Urban), 35% (Rural) |
| Beneficiary Contribution |
General: 10% Special*: 5% |
| Eligibility |
Age > 18 years No income ceiling New projects only |
| Loan Features |
Collateral-free up to ₹10 Lakh Bank loan at normal rates |
| Application | Fully online via KVIC portal |
| Special Categories | SC/ST/OBC/Women/Minorities/Ex-servicemen/etc. |
| Second Loan (Upgradation) | Up to ₹1 Crore (Manufacturing), 15–20% subsidy |
Pradhanmantri Jan Dhan Yojana
Objectives of the PMEGP Scheme 2026
- Unemployment remains a widespread challenge in both rural and urban areas of India, where many young people struggle to find suitable jobs. Recognizing this as a critical issue, the Central Government launched the Prime Minister's Employment Generation Programme (PMEGP) to foster self-employment and entrepreneurship.
- The primary goal of the scheme is to create new employment opportunities across rural and urban regions by supporting the establishment of micro, small, and medium enterprises in the non-farm sector.
- It aims to unite traditionally scattered artisans and provide them with sustainable job options right in their local areas, thereby offering self-employment avenues to unemployed youth.
- By delivering continuous and long-term employment to traditional and aspiring artisans as well as jobless youth in villages and cities, the programme helps curb the migration of rural populations to urban centers in search of work.
- The initiative also seeks to boost overall employment growth in rural and urban areas while enhancing the income-earning potential of artisans.
- Through financial assistance in the form of subsidized loans, PMEGP enables individuals to start their own ventures, reducing unemployment rates and promoting self-reliance among citizens.
- In particular, it focuses on preventing rural residents from migrating to cities by generating permanent local jobs, especially for traditional craftsmen, potential artisans, and unemployed youth who often remain jobless for much of the year after seasonal work.
Key objectives include:
- Generating employment in rural and urban areas.
- Reducing urban migration by promoting local self-employment.
- Empowering marginalized sections through higher subsidies.
- Supporting MSME growth aligned with Atmanirbhar Bharat.
Since inception, PMEGP has assisted lakhs of units, and in 2026, it continues to prioritize digital applications and transparent tracking via the KVIC portal.
Eligibility Criteria for PMEGP 2026
To avail benefits under PMEGP, applicants must meet the following criteria:
- Age: Any individual above 18 years.
- Education: No minimum for projects up to ₹10 lakh (manufacturing) or ₹5 lakh (service). For higher costs, at least Class VIII pass is required.
Category:
- Individuals.
- Self-Help Groups (SHGs), provided they haven't availed subsidies elsewhere.
- Registered societies, production co-operative societies, and charitable trusts.
Family Limit: Only one person per family (self and spouse) can avail assistance.
No Income Ceiling: Anyone can apply, regardless of income.
Special Categories: Higher subsidies for SC/ST/OBC/minorities/women/ex-servicemen/transgenders/differently-abled/NER/hill/border areas.
Institutions not registered under special categories get general rates.
Maximum Project Cost and Loan Amounts
In 2026, under revised guidelines:
- Manufacturing Sector: Maximum project cost eligible for subsidy: ₹50 lakh.
- Service/Business Sector: Maximum ₹20 lakh.
- If costs exceed these, banks can finance the excess without subsidy.
For example:
- A ₹50 lakh manufacturing project qualifies for full subsidy on the eligible amount.
- Loans are collateral-free up to ₹10 lakh; for higher, CGTMSE coverage applies.
Banks provide term loans at normal rates (around 11-13% p.a.), with repayment tenure of 3-7 years after moratorium.
Subsidy Rates and Beneficiary Contribution
The subsidy (Margin Money) is the highlight of PMEGP, ranging from 15% to 35% of project cost:
| Category | Location | Beneficiary Contribution | Subsidy Rate |
|---|---|---|---|
| General | Rural | 10% | 25% |
| General | Urban | 10% | 15% |
| Special (SC/ST/OBC/Minorities/Women/etc.) | Rural | 5% | 35% |
| Special | Urban | 5% | 25% |
- Maximum subsidy: Up to ₹17.5 lakh for a ₹50 lakh manufacturing project in rural special category (35%).
- The subsidy is routed through KVIC and parked in a Term Deposit for 3 years before adjustment.
For second loans (upgradation of existing successful PMEGP units):
- Up to ₹1 crore (manufacturing) or ₹25 lakh (service).
- Flat 15% subsidy (20% in NER/hills).
Benefits of PMEGP Scheme 2026
- Low Personal Investment: Only 5-10% contribution.
- High Subsidy: Reduces effective loan by 15-35%.
- Collateral-Free: Up to ₹10 lakh; guarantee for higher.
- Employment Generation: Each unit expected to create 8 jobs on average.
- Training Support: Mandatory Entrepreneurship Development Programme (EDP) – 6-10 days offline or online.
- Wide Coverage: Rural/urban, manufacturing/service.
- Inclusivity: Prioritizes women and marginalized groups.
- Transparency: Full online application and tracking.
Industries covered under the Prime Minister's Employment Generation Programme
The following industries can be started under the PMEGP scheme:
- Agri-based food processing
- Cement and related products
- Chemicals/polymers and minerals
- Cold storage and cold storage chain solutions
- Dairy products
- Electronic and electrical equipment
- Food processing industry
- Forestry industry
- Fruit production - organic farming
- Paper and related products
- Plastic and related services
- Service sector industries
- Small business models
- Textiles and apparel
- Waste management
How to Apply Online for PMEGP 2026
- The process is fully digital via the Official portal:
- Visit the Portal: Go to https://www.kviconline.gov.in/pmegpeportal (KVIC PMEGP e-portal).
- Register: Click "Application for New Unit" and fill personal details.
- Prepare Project Report: Detail your business idea, costs, and projections. KVIC provides model profiles for hundreds of ideas.
Upload Documents:
- Aadhaar card.
- PAN card.
- Project report.
- Caste certificate (if special category).
- Education certificate (if required).
- Photos, quotations for machinery.
- Application is forwarded to District Task Force Committee (DLTFC) for scrutiny.
- Interview/Verification: Appear before committee if called.
- Bank Sanction: Forwarded to chosen bank for loan approval.
- EDP Training: Complete mandatory training.
- Disbursement: Loan + subsidy released after verification.
Track status online using application ID. Processing typically takes 30-60 days.Physical applications are also accepted at nearest KVIC/KVIB/DIC offices.
Key Guidelines and Important Notes
- Negative List: Avoid meat/alcohol/tobacco, dhaba/catering in some cases, crop cultivation.
- Udyam Registration: Mandatory post-setup for subsidy release.
- Lock-in Period: Subsidy adjusted only after 3 years of successful operation.
- Repayment: Normal bank rates; priority sanction by RBI directive.
- Second Loan: For profitable existing units – repaid first loan, positive cash flow.
- Avoid Middlemen: KVIC warns against agents; apply directly.
Success Tips for PMEGP Applicants in 2026
- Choose viable, local-demand ideas from KVIC model projects.
- Prepare a strong project report with realistic costs (avoid inflation for higher subsidy).
- Complete EDP training sincerely.
- Register on Udyam portal early.
- Track application regularly via SMS/email alerts.
Conclusion
The PMEGP Scheme 2026 offers a golden opportunity for aspiring entrepreneurs to start businesses with minimal personal investment, backed by up to ₹50 lakh loans and 35% subsidies. By fostering micro-enterprises, it not only creates jobs but builds self-reliant communities. If you're over 18 with a solid business idea, apply today on the KVIC portal and turn your entrepreneurial dream into reality. For latest updates, always refer to the official KVIC website.
FAQs on PMEGP Scheme 2026
Q. What is the PMEGP Scheme?
The Prime Minister's Employment Generation Programme (PMEGP) is a credit-linked subsidy scheme by the Ministry of MSME, implemented by KVIC, to help individuals set up new micro-enterprises in non-farm sectors, generating self-employment in rural and urban areas. It continues actively in FY 2025-26 with an aim to support lakhs of new projects.
Q. Who is eligible to apply for PMEGP in 2026?
Any individual above 18 years of age can apply. There is no income ceiling. For projects above ₹10 lakh (manufacturing) or ₹5 lakh (service), minimum 8th standard education is required. Self-Help Groups, societies, and trusts are also eligible, but only for new projects without prior government subsidies.
Q. What is the maximum project cost under PMEGP?
The maximum eligible project cost is ₹50 lakh for manufacturing sector units and ₹20 lakh for service/business sector units. Banks can finance higher costs, but without additional subsidy.
Q. How much subsidy can I get under PMEGP 2026?
Subsidy ranges from 15% to 35% of project cost. General category gets 15% (urban) or 25% (rural); special categories (SC/ST/OBC/women/minorities/ex-servicemen/etc.) get 25% (urban) or 35% (rural). Beneficiary contribution is 5-10%.
Q. Is collateral required for PMEGP loans?
No collateral is needed for loans up to ₹10 lakh. For higher amounts, CGTMSE coverage applies, making it largely collateral-free.
Q. How to apply online for PMEGP Scheme 2026?
Visit the official KVIC portal at kviconline.gov.in/pmegpeportal, register with Aadhaar, fill the application, upload project report and documents, and submit. Applications are forwarded to banks via the District Task Force.
Q. Is EDP training mandatory?
Yes, for subsidy claim: 10 working days for projects above ₹5 lakh, 6 days for up to ₹5 lakh. Not required for projects up to ₹2 lakh. Training can be online or offline through KVIC-approved centers.
Q. What activities are not allowed under PMEGP (negative list)?
Activities like meat processing, alcohol/tobacco production, crop cultivation, plastic carry bags (below certain thickness), and certain environmentally harmful businesses are prohibited.
Q. Can existing businesses apply?
No, only new projects are eligible. However, successful existing PMEGP units can apply for a second loan for upgradation, up to ₹1 crore (manufacturing) with 15-20% subsidy.
Q. How can I track my PMEGP application status?
Use your application ID on the KVIC PMEGP e-portal to track status online. Updates are also sent via SMS and email.
Q. Are there agents or middlemen for PMEGP?
No, KVIC warns against agents or franchises. Apply directly online or at KVIC/KVIB/DIC offices to avoid fraud.
Q. What is the loan repayment period and interest rate?
Repayment tenure is 3-7 years with a moratorium. Interest rates are normal bank rates (around 11-13%), as decided by the financing bank.