PMEGP (Prime Minister's Employment Generation Programme)

PMEGP (Prime Minister's Employment Generation Programme) is a central sector scheme launched in 2008 by merging two earlier schemes (PMRY and REGP). It is administered by the Khadi and Village Industries Commission (KVIC) at the national level and implemented through State KVICs, Khadi and Village Industries Boards (KVIBs), and District Industries Centres (DICs). PMEGP provides a credit-linked capital subsidy — the government provides 15–35% of the project cost as a non-refundable margin money grant, and the entrepreneur raises the remainder via bank term loan and own contribution.

Subsidy structure in FY2024-25: General category: 15% subsidy in urban areas, 25% in rural areas. Special categories (SC/ST, OBC, women, minorities, ex-servicemen, physically challenged, NER/Hill/Border areas): 25% in urban areas, 35% in rural areas. The entrepreneur's own contribution is 10% (general) or 5% (special category). The bank loan covers the balance. Maximum project cost under PMEGP: Rs 50 lakh for manufacturing (Rs 20 lakh for services). Recycling businesses (plastic recycling, paper recycling, e-waste dismantling at small scale) are classified under manufacturing and qualify for the Rs 50 lakh limit.

The subsidy is kept in a 3-year lock-in period in a TDR (Term Deposit Receipt) as 'back-ended subsidy' — the bank holds it for 3 years while the entrepreneur services the full loan; after 3 years if the enterprise is functioning, the TDR amount is adjusted against the principal outstanding. This means the entrepreneur's effective loan reduces by the subsidy amount after 3 years of operation. The practical subsidy effect: on a Rs 50 lakh manufacturing project in rural India (25% subsidy, general category), the entrepreneur receives Rs 12.5 lakh effectively after 3 years, funded by the government. The bank charges interest on the full Rs 50 lakh for the first 3 years — this is the cash cost of the lock-in.

For waste sector entrepreneurs, PMEGP is best suited for first-time micro-enterprise setup (not expansion of existing businesses above the PMEGP limits). Eligible waste businesses include: small plastic recycling units, paper and cardboard recycling, vermicomposting (linked to organic waste), small e-waste dismantling/sorting units. Apply through the PMEGP online portal (www.kviconline.gov.in/pmegpeportal) with Aadhaar, Udyam registration, DPR, and bank loan application. The DIC in your district provides free DPR assistance under the scheme. Processing time: 60–120 days from complete application submission.