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FREE MSME EXAM NOTES | MSME DEVELOPMENT | PMEGP

FREE MSME EXAM NOTES | MSME DEVELOPMENT | PMEGP

PMEGP: PRIME MINISTER’S EMPLOYMENT GENERATION PROGRAMME

It is a Credit linked subsidy program that is administered by the MSME ministry, GOI. The agency that is responsible to implement this scheme is the Khadi & Village Industries Commission (KVIC). Responsibility for the implementation of the scheme at the state level lies with KVIB and for the center with the District Industries Center (DIC). 

The assistance of this program can be accessed by applying online. Government under this scheme assists by providing subsidies from 15 to 35% of the cost of the project of the MSMEs. 

If you are an entrepreneur, then PMEGP I will provide you assistance in the financial nature through which you can set up a new project.

OBJECTIVES OF THE PMEGP SCHEME

  • It aims to increase employment opportunities in India’s urban as well as rural areas by setting up new projects (micro-enterprises and ventures) which produce self-employment opportunities. 
  • It also aims to increase employment opportunities for India’s traditional artisans or the unemployed youth, which could be feasible at their location. 
  • One another objective of this scheme is to generate sustainable and continuous employment for the rural youth without having them migrate to the urban areas. 
  • One another objective of PMEGP is to boost the income earning capacity of Indian artists as well as increase the growth rate of employment opportunities for rural as well as urban artisans.

THE MAXIMUM SUBSIDY THAT YOU CAN GET THROUGH THE PMEGP LOAN SCHEME

Beneficiary categories

(of total project)

Beneficiary’s share Subsidy rate for (from govt.) – Urban Areas Subsidy rate (from govt.) for – Rural Areas
General 10% 15% 25%
Special (i.e. including SC / ST / OBC / Minorities / Women,  Ex-servicemen, 

Handicapped, NER, Hill &

Border areas etc.)

5% 25% 35%

 

PMEGP LOAN LIMIT

The range of loans that can be availed under PMEGP is Rs. 9.5 lacs to 23.75 lacs. 

While the maximum project cost for: 

The manufacturing sector is Rs. 25 lacs

The business or service sector is Rs. 10 lacs

The beneficiaries have to make personal contributions from 5 to 10% while the bank will put in the rest of the amount in the form of a bank loan (90 to 95%) 

And in actuality, the bank credit (provided as a term loan) will only amount to 60 to 75% of the cost of the project because 15 to 35% will be covered through the PMEGP scheme.

IS COLLATERAL NEEDED UNDER PMEGP LOAN?

  • As per the guidelines of RBI, projects that cost a maximum of Rs. 10 lacs do not need any security
  • But for projects whose costs range from Rs. 5 lacs to 25 lacs, a collateral guarantee is needed to be provided. 
  • While in the loan process under PMEGP, the security will depend on the terms of the bank for the loans which are above Rs. 10 lacs

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INTEREST RATE ON PMEGP LOAN 

The interest rate for the loans under PMEGP ranges from 11 to 12%. 

MAIN PMEGP LOAN DETAILS

  • Bank will sanction 90% to 95% of the cost of the project. 
  • Government will provide 15% to 35% as a subsidy of the cost of the project. 
  • The balance of 60% to 75% will be provided as a term loan by the bank. 
  • Regular interest rates will be applicable on the term loan ranging from 11 % to 12%. 
  • The tenure of the repayment will range from 11% to 12% after the over of the preliminary Moratorium.

ELIGIBILITY FOR PMEGP LOAN

Below is a list of persons who are eligible to apply for the PMEGP scheme: 

  • An individual who has attained adulthood (18 years or more). 
  • For a manufacturing sector project whose cost is more than Rs 10 lacs while if the project is for a business or service sector project whose project cost is above Rs. 5 lacs, he or she should have passed at least the 8th standard. 
  • Self-help groups (SHG)
  • Institutions that are registered under the Societies Registration Act,1860
  • Co-operative societies involved in the production
  • Charitable trusts

INELIGIBILITY FOR PMEGP LOAN

The units which are already benefiting from one or the other state government or central government scheme are ineligible to apply for a PMEGP loan.

DOCUMENTS REQUIRED TO MAKE A PMEGP LOAN APPLICATION

Below are some of the documents which are required to make a PMEGP loan:

  • Aadhaar card
  • PAN card
  • Special category certificate, if eligible
  • Project report
  • Certificate of Rural area
  • Education/ skill development training/ EDP certificate
  • Authorization letter

MAKING A PMEGP ONLINE APPLICATION

One can apply for the PMEGP scheme online via its e-portal. 

  • You need to click on either ‘online application form for individual’/or ‘online application form for non-individual as per your legal status.
  1. Then fill in the entire form such as name, sponsoring agency, type of activity your project is involved in, first financing bank, and so on.
  2. When you are done with filling of the form, click on ‘save applicant data
  3. Then the portal would require you to upload documents to prepare for final submission.
  4. Post-final submission, you will be issued an application ID and a password. It will be sent to your registered mobile no.

This way the application for PMEGP can be filed with the government.

NEGATIVE LIST OF ACTIVITIES: 

Projects which are involved in the following activities are ineligible to get the benefit of this scheme. These activities are mentioned below:

  • Meat/Intoxicant Items: Industry or Business which is connected with the production or processing or sale of meat or intoxicant items like Beedi / Pan / Cigar / Cigarette etc. 
  • Industry or Business involved in the cultivation, sericulture, horticulture, & floriculture. 
  • Industry or Business involved in the manufacture of Polythene carry bags < 20 microns/containers of recycled plastic. 
  • Processing of Pashmina Wool and products involving hand spinning and hand weaving come under the purview of the Khadi Certification Rule
  • Rural Transport excluding transportation through Auto rickshaw, Houseboat, tourist boat in A&N Islands and except houseboat, Shikara & Tourist Boats in Jammu & Kashmir and Cycle Rickshaw.

Note: CNG Auto Rickshaw will be allowed (for the benefit of this scheme) only in A & N Islands and NER after the approval of the Chief Secretary of the State on the basis of merit.

So, if your business is involved in other activities than the mentioned above then you can apply for the PMEGP scheme and get 15-35% of your project amount in the form of a subsidy.

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