PMEGP Loan & Subsidy 2026 – How to Apply in Tamil Nadu

⚙️ What is PMEGP?

Prime Minister's Employment Generation Programme (PMEGP) is a credit-linked subsidy scheme administered by KVIC (Khadi and Village Industries Commission). It provides upfront capital subsidy (government grant, not repayable) of 15–35% on your project cost, making it one of the best schemes for starting a new manufacturing or service business.

🎁

15–35%

Capital Subsidy (Non-Repayable)

💰

₹50 Lakh

Max Project Cost (Mfg)

🏪

₹20 Lakh

Max Project Cost (Service)

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Only 5–10%

Your Own Contribution

PMEGP Subsidy Structure

Category	Urban Area Subsidy	Rural Area Subsidy	Beneficiary Contribution
General (Open) Category	15%	25%	10% of project cost
SC / ST / OBC / Women / Minorities / Ex-servicemen / Differently abled / NER / Hill & Border areas	25%	35%	5% of project cost

💡 Real Example: If your project costs ₹10 lakh in urban Tamil Nadu as a general category applicant, you pay ₹1 lakh (10%), the government gives ₹1.5 lakh as subsidy (15%), and the bank finances the remaining ₹7.5 lakh (75%) as a loan. You repay only ₹7.5 lakh.

Eligibility

Indian citizen aged 18 years or above
For projects above ₹10 lakh (manufacturing) or ₹5 lakh (service), at least VIII standard pass
New units only, existing units and units that have already availed government subsidy are not eligible
Self Help Groups (SHGs), charitable trusts, and production cooperatives also eligible
No income ceiling for beneficiaries

Documents Required

Aadhaar and PAN card
Educational qualification certificates
Project report (detailed, KVIC has templates)
EDP (Entrepreneurship Development Programme) training certificate, 2 weeks training required
Caste / special category certificate if applicable
Photographs and residence proof
Udyam registration

How to Apply

Apply online at kviconline.gov.in

Complete EDP Training

You must complete a 2-week Entrepreneurship Development Programme (EDP) from KVIC/KVIB/DIC. This is mandatory before final sanction.

Scrutiny by KVIC/KVIB/DIC

Your application is reviewed by KVIC, KVIB (State Khadi Board), or DIC (District Industries Centre) depending on the project category and size.

Bank appraisal & sanction

The implementing agency forwards your application to your chosen bank. The bank evaluates the project and sanctions the loan.

Subsidy disbursement

The subsidy amount is kept in a fixed deposit linked to your loan account for 3 years. After 3 years of satisfactory repayment, it is adjusted to your loan outstanding.

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Frequently Asked Questions

Is PMEGP subsidy repayable?▼

No. The PMEGP subsidy is a government grant, it is NOT a loan and does not need to be repaid. It is locked as an FD for 3 years and then adjusted against your outstanding loan principal.

Can I apply for PMEGP for a retail shop?▼

No. Trading and retail activities are not eligible under PMEGP. It covers manufacturing and service sector activities. Examples: food processing, tailoring, furniture making, beauty salon, repair services.

What is the EDP training and is it mandatory?▼

EDP (Entrepreneurship Development Programme) is a 2-week training on running a business. It is mandatory before your PMEGP loan can be finally sanctioned. KVIC, KVIB, and DICs in Tamil Nadu conduct these trainings regularly.

How long does PMEGP application take?▼

Typically 2–4 months from application to disbursement including EDP training time. Having a strong project report and all documents ready from day one significantly speeds up the process.