PMEGP – How to start small business in India

The Government of India is helping its citizens build their own businesses through its subsidy programme called PMEGP aka Prime Minister’s Employment Generation Programme.

If you are planning to start your own business, and want to apply for a business loan, you should know about the PMEGP programme.

In this article, I will try to explain what PMEGP is, how it helps you as an entrepreneur, and how to apply for this scheme and start your own business.

Let’s begin with the basics:

What is PMEGP or Prime Minister’s Employment Generation Programme?

PMEGP is a Government of India initiative which helps individuals who want to start their own businesses. This scheme aims to generate employment for unemployed youth, who can establish micro-enterprises in both rural and urban areas.

This programme is run by the Ministry of Micro, Small and Medium Enterprises (MoMSME). At the national level, Khadi and Village Industries Commission (KVIC) is implementing this scheme as a nodal agency. At the state level, it is implemented through a few state-run organisations including banks.

Why did the Indian Government start PMEGP?

The objective of PMEGP is to generate employment opportunities for people in rural and urban areas. It helps both existing micro-businesses and also unemployed youth in starting their own businesses.

It also aims to bring together widely dispersed traditional artisans and give them self-employment opportunities, in their place.

Who can apply for PMEGP?

Any individual above 18 years can avail of the benefits of this scheme. However, if you are looking for Rs.5 lakh for a service sector and Rs.10 lakh for a manufacturing sector business, you’ll need to have passed at least the 8th standard.

Financial assistance is also given to SHGs (Self Help Groups) and charitable trusts, production-based co-operative societies and institutions registered under Societies Registration Act,1860.

The scheme is available only for new projects sanctioned specifically under the PMEGP.

Which businesses are not eligible for PMEGP?

Existing Units (under PMRY, REGP or any other scheme of Government of India or State Government) and the units that have already availed Government Subsidy under any other scheme of Government of India or State Government are not eligible, as per the announcement.

Other than that, here’s a list of businesses that are not eligible for PMEGP.

  1. a) Any industry/ business connected with Meat(slaughtered), i.e. processing, canning and/or serving items made of it as food, production/manufacturing or sale of intoxicant items like Beedi/Pan/ Cigar/Cigarette etc., any Hotel or Dhaba or sales outlet serving liquor, preparation/producing tobacco as raw materials, tapping of toddy for sale.
  2. b) Any industry/business connected with the cultivation of crops/plantations like Tea, Coffee, Rubber etc. sericulture (Cocoon rearing), Horticulture, and Floriculture. Value addition under these will be allowed under PMEGP.
  3. c) Any industry/business connected with Animal Husbandry like Pisciculture, Piggery, Poultry, etc.
  4. d) Manufacturing of Polythene carry bags of less than 20 microns thickness and manufacture of carry-bags or containers made of recycled plastic for storing, carrying, dispensing or packaging of foodstuff and any other item which causes environmental problems.

Why should you apply for PMEGP?

The Government of India is making all efforts to help people build sustainable businesses and create employment opportunities. It helps educated but unemployed youth to start their own business. Also, banks are eager to help such individuals who want to build their own micro-enterprises.

The system is built for you and is doing everything possible to help you. So, if you are genuinely interested, you should make a proper business plan and apply for the scheme.

How to apply for PMEGP

There are two ways you can apply for the scheme: 1. Online & 2. Offline.

How to apply online for PMEGP 

  1. Visit this link to find the online application form.
  2. Fill out the form with the required information. 
  3. After completing the form, click on Save Applicant Data.
  4. In the next step, you’ll need to upload the required documents.
  5. After the final submission, you’ll receive your ID number and password to your registered mobile number. (You can use this information to check your application status.)

How to apply offline for PMEGP

  1. To apply offline, you will need to fill out the application form. (Download the PMEGP-application-form here.)
  2. Submit the application with the required documents to the nearest office. 

PMEGP skill development training program

The preference for this loan will be given to people who have undergone at least 2 weeks of training under:

  • Entrepreneurship Development Programme (EDP) 
  • Skill Development Programme (SDP) 
  • Entrepreneurship cum Skill Development Programme (ESDP) 
  • Vocational Training (VT) 

If you have completed any of these, you can submit your application directly to banks.

Why do PMEGP applications get rejected?

One of the major challenges for PMEGP business enthusiasts is that their applications are not approved by the banks. Here are three major reasons:

1. No proper business plan

Banks will not give you a PMEGP loan just because you want to start some business. You will have to come up with a proper business plan. Get professional help in creating your business plan because that one document will guide you in your business journey.

2. Business reports are not proper

One major reason why your PMEGP application gets rejected is that your business report is not good enough. Banks say that the project reports are written very poorly. So, contact professional project report creators to get your report done. If your report has all the required information and is impressive, getting the loan will be easy.

3. Focus on subsidy

When you apply for a PMEGP loan, banks do scrutiny on your business plans. And it has been found that some people are really not interested in building a business, but apply for PMEGP schemes only to get the subsidy money. 

This has made the approval process more strict. That means even genuine business enthusiasts also have to undergo a thorough check.

I would like to tell you something – any government subsidy is like a goose that lays golden eggs. If you create a genuine business plan and build it properly, it will grow so well that you will be financially in a good position and also help a lot of people through your business.

But, anyone thinking of getting the subsidy and running off is killing the golden goose. It won’t help them in the long run. They not only face legal implications but will also lose their entrepreneurial spirit.

This blog post is written for genuinely interested people. The employment guarantee system is built to help you as a successful businessman. It takes initial efforts but will help you succeed if you persist.

The subsidy is a push to help people in their businessmen journey. So, everyone should take it in the right spirit.

Frequently Asked Questions on PMEGP (FAQs)

Who can apply for Prime Minister’s Employment Generation Programme (PMEGP) Candidates: Any Individual

Age: 18 Years

Education: 8th standard (for Rs.5 Lakh in service and Rs.10 lakh in manufacturing)

Maximum project cost Rs. 25 lakh for Manufacturing business

Rs. 10 lakh for Service business

Subsidy & Tenure From 15% to 35%

Tenure is 3-7 years

PMEGP Rate of Interest 11% – 12%
Documents required for PMEGP
  1. Passport size photo
  2. Caste Certificate
  3. Special Category Certificate, wherever required.
  4. Rural Area certificate.
  5. Project Report.
  6. Education/ EDP/Skill Development training certificate
  7. In case of Institutions self-attested copies of the following are also required;
    1. Registration certificate
    2. Authorization letter/copy of bye-laws authorizing Secretary etc. to apply.
    3. Certificate for Special Category, wherever required.
Rural or Urban? Both rural and urban

If you are looking for more information or help with project reports, you can write to: raghavendra@thinqproduct.com

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