Top Business Ideas You Can Start with PMEGP Funding in India
7 January, 2025
Synopsis:
- The Ministry of Micro, Small, and Medium Enterprises (MSMEs) launched the Prime Minister’s Employment Generation Programme (PMEGP) in 2008.
- The scheme, implemented through the Khadi and Village Industries Commission (KVIC), aims to promote new self-employment opportunities in non-farm sectors across India.
- The loan approved under the PMEGP scheme is available for explicitly approved operations only.
Introduction
You will need financial support to start a new business or manage an existing one. However, obtaining a loan is challenging for small businesses, especially the new ones, and Micro, Small, and Medium Enterprises (MSMEs).
The Government of India launched the Prime Minister’s Employment Generation Programme (PMEGP) in March 2008 to offer subsidies to MSMEs. The initiative clubs the previous Rural Employment Generation Programme (REGP) and Prime Minister Rozgar Yojana (PMRY).
This post discusses the availability and acceptability of a PMEGP Loan for new business.
Quick facts about PMEGP Loan
The PMEGP scheme provides financial assistance to MSMEs to help them sustain or grow their businesses. You can also use the loan to start an approved business under the PMEGP scheme. Here are some quick facts about the PMEGP scheme.
Interest rate - The interest rate varies from one bank to another but remains the lowest applicable in that particular category.
Age criteria - The applicant must be at least 18 years old.
Eligible applicant categories - Business owners, cooperative societies, institutions, charitable trusts, and self-help groups can apply.
Educational requirements - The borrower must have at least cleared class 8th.
Loan limit - The maximum project cost for a service unit is ₹ 20 lakh, and for a manufacturing unit is ₹ 50 lakh.
Subsidy on project - The scheme provides a subsidy from 15% to 35%.
Repayment period - The repayment period is three to seven years after a preliminary moratorium.
What is the PMEGP Loan limit?
You can apply for a PMEGP Loan between ₹ 9.5 lakh and ₹ 50 lakh. It varies for different businesses. If you are starting a business in the manufacturing sector, you can get ₹ 50 lakh. Similarly, the project cost for the business/services sector is capped at ₹ 20 lakh. The beneficiary’s contribution must be 5% to 10%, with the bank approving the remaining 90% to 95%.
However, reality is a bit different. The bank gives you only 60% to 75% of the project cost. The PMEGP scheme covers the remaining 15% to 30%. The PMEGP Loan is a mix of Term Loans and working capital.
Before starting a new business under PMEGP, you must know which operations are approved and which are on the negative list. This information helps you come up with the best business ideas.
List of operations approved under the PMEGP scheme
Agriculture and food processing
Service and textile
Mineral products
Forest-based products
Handmade paper and fibre
Rural engineering and biotech
Polymer and chemical products
List of operations on the negative list under the PMEGP scheme
Cash crop-related activities
Tobacco and other related goods
Slaughterhouse and meat-processing activities
Toddy sales and tapping activities
Liquor-serving restaurants/cafes/dhabas
Horticulture, floriculture, etc.
Top PMEGP business ideas
Chemical manufacturing business
The Indian chemical industry is growing, and chemicals are the mainstay of the country’s industrial and agricultural development. Starting a chemical manufacturing business can be profitable. The business list under PMEGP for the chemical industry includes ideas for producing rubber moulding, Plaster of Paris, paint, lubricants oil, camphor, sports rubber mats, etc.
Forest-based products
Forest-based industries include silk, paper, sports goods, and handicrafts. You can start a psyllium husk processing or bee-keeping business. You can also manufacture wooden toys, wood furniture, cricket bats, designer wooden doors, broomsticks, areca leaf plates, eco-friendly bamboo granule spoons, or vetiver grass oil.
Dairy and milk products
The Indian economy heavily depends on agriculture and animal husbandry. You can apply for a dairy loan under the PMEGP scheme to start cattle feed making, rabri making, peda making, khoya making, curd processing, or ghee processing business. The demand for these products is high and will attract large profits.
Conclusion
Starting a business under the PMEGP scheme is an excellent opportunity for individuals wanting financial independence. You can start a profitable business by identifying a market gap and customising your business to meet the demand. The KVIC loan list provides endless options, allowing you to start a business in an industry of your choice, whether it is agriculture, manufacturing, or servicing.
HDFC Bank helps individuals apply for a PMEGP Loan. The team assists with the application process, ensuring it is smooth and there are no delays in loan approval.
Disclaimer: *Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.