Understanding PMEGP, the easy way

As the Indian population is rising constantly, it is becoming difficult to offer suitable employment to all. Even after the liberalization of 1992, India has largely remain an outsourcing hub for IT services. Although the growth story has been good, to say the least, it’s not enough.

There is a dire need for revamping India’s economical and financial structure, to encourage entrepreneurship, start-ups and artisans to create better employment opportunity. Fortunately, the Government has taken multiple steps to entrepreneurship- friendly environment in India. With focus on minimizing the compliances and offering better financial support, there are numerous facilities available for start-ups.

We are going to talk about one such scheme here, PMEGP.

Let’s understand what it is?

What is PMEGP?

PMEGP (Prime Minister Employment Generation Program) is an integrated scheme that covers the scope of PMRY(Prime Minster Rojgar Yojna) & REGP(Rural Employment Generation Programme). As both of these schemes had similar goals, they were integrated into one to ensure maximum efficiency.

Traditional Artisans % rural youth are at the core of this Scheme. Under this scheme, financial support is provided to the beneficiaries for establishing a new Business. Here, the Government bares the 15%-35% of the total cost of the proposed project in the form of subsidy, the beneficiary bares 5%-10% of the total cost and the rest is offered by the bank in the form of term loan. This all-party participation ensures that the beneficiary utilizes the fund efficiently.

What are the core objectives of PMEGP?

PMEGP has following Core-objectives.

1. To create better earning opportunities for artisans & ensure better employment in Rural and Urban areas
2. To offer a good platform and unify broadly distributed traditional artisans & unemployed youth so that they can create new Business opportunities.
3. To boost the numbers of self-employment generating Micro-businesses.
4. To minimize the migration of traditional artisans & rural or urban youth who are unable to get full-time employment, instead of seasonal one.

Who can obtain a loan under PMEGP?

Following entities are eligible to avail loan under PMEGP scheme

1. Any 18 years or above individual is eligible to avail the benefit of loan under this scheme. But if that individual wants to establish a manufacturing unit, with the investment of more than 10 lakh, or service unit of more than 5 lakh, the minimum education qualification is 8^th pass.
2. Any societies registered under the Societies Registration Act,1860 can avail the loan under this scheme.
3. Any Co-operative Society involved in the Business of production ot manufacturing can avail this loan.
4. Any self-help group that has not availed benefit under any other Government scheme can also avail the benefit under PMEGP
5. Any Charitable trust that is registered with the Government can also avail this facility.

What are the features of PMEGP?

Now let’s take a look at the feature of PMEGP

1. The Maximum Project cost for a Manufacturing unit that wants to benefit from this scheme should be INR 25 lakh.
2.  The Maximum Project cost for a Service unit that wants to benefit from this scheme should be INR 10 lakh.
3. If the project cost is more than 5 lakh, EDP(Entrepreneurship Development Programme)-training of a minimum of 10 days is mandatory.
4. The interest rate for the PMEGP loan will vary, depending on the involved bank, the project’s viability, cost of the project, & beneficiary’s profile.
5. The tenure for the term loan availed under the PMEGP scheme is generally 3 years after the moratorium, not exceeding 6 months.
6. The minimum age for an Individual beneficiary is 18 years.
7. For Rural areas, the Government will offer a maximum subsidy of up to 25% to the General category individuals and up to 35% to the SC/ST/OBC category individuals.
8. For Urban Areas, The Government will offer a maximum subsidy of up to 15% to the General category individuals and up to 25% to the SC/ST/OBC category individuals.
9. The following sectors can avail the benefits of the PMEGP scheme:
   1. Hand Made Paper Manufacturing
   2. Hand Made Fibre Manufacturing
   3. Polymer products
   4. Chemical products
   5. Textile Products
   6. Forest Products
   7. Agro Products
   8. Rural engineering
   9. Rural Bio-tech
   10. Mineral-based Products
10. The beneficiary’s share under this scheme will be 10% of the total project cost for General category individuals and 5% for the SC/ST/OBC category individuals.
11. The minimum Lock-in period for the Government’s subsidy is 3 years. This money stays in a separate saving account that is linked with the loan account during this period.
12. You can apply for the PMEGP loan via the Online or Offline route.

What documents are necessary for availing the loan under PMEGP scheme?

You will need following document to avail the loan:

1. Aadhaar Card
2. PAN card
3. Project Report
4. 8th Pass certificate
5. Any other  identity proof
6. Category  Certificate (if applicable)
7. EDP training certificate

Once you have all the necessary documents and satisfy all the criteria, you can apply for the loan online. All you have to do is visit https://www.kviconline.gov.in/pmegpeportal/jsp/pmegponline.jsp and follow the mentioned guidelines.

Although the process is simple, it’s better to get an expert’s help before you apply for the loan. You will have to prepare a Project Report, collect all the necessary documents and fill the form correctly. So it would be good to get help from an expert.

Final thoughts

PMEGP is a great funding option for traditional artisans and rural or urban youths. Using these funds, they can setup self-employment opportunities or create booming Businesses. So if you are one of the above, make sure you take the benefit of the scheme.

For any more details on Funding, Project Report or Government schemes, get in touch with our experts today.

What Business are you planning to start?

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