Government of India has approved the introduction of a new credit linked subsidy programme called Prime Minister’s Employment Generation Programme (PMEGP) by merging the two schemes that were in operation till 31.03.2008, namely Prime Minister’s Rojgar Yojana (PMRY) and Rural Employment Generation Programme (REGP) for generation of employment opportunities through establishment of micro enterprises in rural as well as urban areas.
PMEGP is a central sector scheme administered by the Ministry of Micro, Small and Medium Enterprises (MoMSME). At the national level, the Scheme is being implemented by Khadi and Village Industries Commission (KVIC), a statutory organization under the administrative control of the Ministry of MSME as the single nodal agency.
At the State level, the Scheme will be implemented through State KVIC Directorates, State Khadi and Village Ind ustries Boards (KVIBs) and District Industries Centres (DICs) and banks.
The Government subsidy under the Scheme will be routed by KVIC through the identified Banks for eventual distribution to the beneficiaries / entrepreneurs in their Bank accounts.
The Implementing Agencies, namely KVIC, KVIBs and DICs will associate reputed Non Government Organization (NGOs)/reputed autonomous institutions/Self Help Groups (SHGs) / National Small Industries Corporation (NSIC) / Udyami Mitras empanelled under Rajiv Gandhi Udyami Mitra Yojana (RGUMY), Panchayati Raj institutions and other relevant bodies in the implementation of the Scheme, especially in the area of identification of beneficiaries, of area specific viable projects, and providing training in entrepreneurship development.
The scheme is implemented by Khadi and Village Industries Commission (KVIC) functioning as the nodal agency at the national level. At the state level, the scheme is implemented through State KVIC Directorates, State Khadi and Village Industries Boards (KVIBs), District Industries Centres (DICs) and banks. In such cases KVIC routes government subsidy through designated banks for eventual disbursal to the beneficiaries / entrepreneurs directly into their bank accounts.
> To generate employment opportunities in rural as well as urban areas of the country through setting up of new self-employment ventures/projects/micro enterprises.
> To bring together widely dispersed traditional artisans/ rural and urban unemployed youth and give them self-employment opportunities to the extent possible, at their place.
> To provide continuous and sustainable employment to a large segment of traditional and prospective artisans and rural and urban unemployed youth in the country, so as to help arrest migration of rural youth to urban areas.
> To increase the wage earning capacity of artisans and contribute to increase in the growth rate of rural and urban employment. A Taxable Person – Any person registered or obligated to register for tax purposes, who makes a supply of taxable Goods or Services or a deemed supply excluding Exempt supply.
Salient features of Scheme:
> The Scheme is implemented through KVIC and State/UT Khadi & V.I. Boards in Rural areas and through District Industries Centres in Urban and Rural areas in ratio of 30:30:40 between KVIC / KVIB / DIC respectively.
> No income ceiling for setting up of projects.
> Assistance under the Scheme is available only to new units to be established.
> Existing units or units already availed any Govt. Subsidy either under State/Central Govt. Schemes are not eligible.
> Any industry including Coir Based projects excluding those mentioned in the negative list.
> Per capita investment should not exceed Rs. 1.00 lakhs in plain areas and Rs. 1.50 lakhs in Hilly areas.
> Maximum project cost of Rs. 25.00 lakhs in manufacturing sector and Rs. 10.00 lakhs in Service Sector.
Nature of Assistance:
The maximum cost of the project/unit admissible in manufacturing sector is ₹ 25 lakhs and in the business/service sector, it is ₹ 10 lakhs.
Categories of Beneficiary’s Rate of subsidy under PMEGP (of project cost)
Area (location of project/unit) General category 15%(Urban), 25%(Rural), Special 25%(Urban), 35%(Rural) (including SC/ ST/ OBC/ Minorities/Women, Ex-servicemen, Physically handicapped, NER, Hill and Border areas, etc.)
The balance amount of the total project cost will be provided by the banks in the form of term loan and working capital.
Benefits of Scheme:
> The maximum cost of the project/unit admissible under manufacturing sector is Rs.25 lakh and under business/service sector is Rs.10 lakh.
> Per capital investment should not exceed ₹ 1.00 lakh in plain areas and ₹ 1.50 lakhs in Hilly areas.
> Own contribution 5% to 10% of project cost.
> General category beneficiaries can avail of margin money subsidy of 25 % of the project cost in rural areas and 15% in urban areas. For beneficiaries belonging to special categories such as scheduled caste/scheduled tribe /women the margin money subsidy is 35% in rural areas and 25% in urban areas.
> Quantum of Margin Money Subsidy is given as follows:
|Categories of beneficiaries under PMEGP
|Beneficiary’s own contribution (of project cost)
|Rate of Subsidy from KVIC
|Area (location of project /unit)
|Special (including SC/ ST/ OBC/ Minorities/ Women, Physically handicapped, Ex-Servicemen, NER, Hill and Border areas etc.
Who Can Apply?
> Any individual, above 18 years of age. At least VIII standard pass for projects costing above Rs.10 lakh in the manufacturing sector and above Rs. 5 lakh in the business / service sector. Only new projects are considered for sanction under PMEGP.
> Self Help Groups (including those belonging to BPL provided that they have not availed benefits under any other Scheme),
> Institutions registered under Societies Registration Act,1860;
> Production Co-operative Societies, and
> Charitable Trusts.
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.
Selection of Beneficiaries:
The beneficiaries will be identified & selected at the district level by a Task Force consisting of representatives from KVIC/State KVIB/ State DICs and Banks and headed by the District Magistrate / Deputy Commissioner / Collector concerned.
Negative List of Activities:
> Industry / Business connected with productions / processing / sale of meat or intoxicant items like Beedi / Pan / Cigar / Cigarette etc.
> Industry / Business connected with cultivation, sericulture, horticulture, floriculture.
> Manufacture of Polythene carry bags of less than 20 microns / containers of recycled plastic.
> Processing of Pashmina Wool and products involving hand spinning and hand weaving coming under purview of Khadi Certification Rule.
> Rural Transport (except Auto rickshaw, House boat, tourist boat in A & N Islands and except house boat, Shikara & Tourist Boats in Jammu & Kashmir and Cycle Rickshaw.)
> CNG Auto Rickshaw will be allowed only in A & N Islands and NER with the approval of Chief Secretary of the State on merit.
How to Apply?
The State/Divisional Directors of KVIC in consultation with KVIB and Director of Industries of respective states (for DICs) will give advertisements locally through print & electronic media inviting applications along with project proposals from prospective beneficiaries desirous of establishing the enterprise/ starting of service units under PMEGP.
Guidelines on PMEGP
Whom to contact?
FAQs for PMEGP
Online Application Submission
PMEGP sample Project Profiles
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Author of this article is CA Deepak Bharti who is Practicing Chartered Accountant by profession. Currently he is working as Senior Advisor in Income Tax, GST, Corporate Compliance and Legal Matters with many reputed organizations. He can be reached at email@example.com. Suggestions/comments are most welcome.