PMEGP Project Cost Limits: ₹50 lakh manufacturing, ₹20 lakh service
The maximum project cost admissible for margin money subsidy under PMEGP is ₹50 lakh for a manufacturing unit and ₹20 lakh for a service or business unit. These ceilings were raised from ₹25 lakh and ₹10 lakh respectively, and a substantial amount of content still online quotes the older figures. Cost above the ceiling can still be funded by the bank, but it earns no subsidy.
Two things worth being clear about
- There is no such thing as guaranteed approval. A subsidy under this scheme is not a grant and it is not sanction. The bank assesses the file on its own credit policy and can decline it after the task force has recommended it. The subsidy is also conditional on the unit running: it sits in a locked deposit for three years, and a unit that closes in that window can have it withdrawn and recovered.
- The loan does not come from the government. KVIC is the national nodal agency, with State KVIBs and District Industries Centres implementing it alongside the financing banks. KVIC or the DIC screens and recommends the file, but the bank sanctions the loan and holds the subsidy.
What it costs per month
Pre-set to 9%, the reference starting rate for public sector bank lending under this scheme. There is no scheme-set rate - change it to the rate you have actually been quoted to see your real instalment, total interest and full repayment schedule.
Monthly EMI
₹20,758
₹10 Lakh at 9.00% for 5 years
Interest is 25% of the amount borrowed over this tenure.
Year-by-year repayment schedule
How each year splits between interest and principal. Early years are mostly interest, which is why prepaying early saves so much more than prepaying late.
| Year | Principal paid | Interest paid | Balance |
|---|---|---|---|
| 1 | ₹1,65,830 | ₹83,270 | ₹8,34,170 |
| 2 | ₹1,81,386 | ₹67,714 | ₹6,52,784 |
| 3 | ₹1,98,401 | ₹50,699 | ₹4,54,382 |
| 4 | ₹2,17,013 | ₹32,088 | ₹2,37,370 |
| 5 | ₹2,37,370 | ₹11,730 | ₹0 |
This calculator returns arithmetic on the figures you enter. It is not an offer, does not check your eligibility, and cannot predict the rate a lender will sanction. Loans Got Easy is an authorised Direct Selling Agent - we do not sanction, approve or disburse loans.
The ceiling is on the project, not on the loan
This distinction matters when you build the project report. The subsidy percentage is applied to total project cost - capital expenditure plus one cycle of working capital - and the ceiling caps the amount of that cost which is subsidy-eligible. If your project costs ₹60 lakh as a manufacturing unit, ₹50 lakh of it attracts subsidy and the remaining ₹10 lakh is ordinary bank finance you service in full.
Manufacturing versus service classification
The higher ceiling is the main reason applicants want a project classified as manufacturing, and it is worth being straightforward about this: the classification has to be genuine and the project report has to support it. A trading or service operation described as manufacturing to reach the ₹50 lakh ceiling is the kind of thing a task force interview is designed to surface, and a file that fails there has cost you the application cycle.
What you contribute and what the bank finances
For a general category applicant the subsidy is 25% of project cost in a rural area and 15% in an urban area, with 10% of the cost contributed by you. For a special category applicant - SC, ST, OBC, minorities, women, ex-servicemen, physically handicapped, and applicants in the North Eastern Region, hill and border areas - it is 35% rural and 25% urban, with 5% own contribution. The bank finances the balance. Bank finance covers roughly 90% of project cost for a general applicant and 95% for a special category applicant, with your own contribution making up the rest. The subsidy is carved out of the bank's exposure once sanctioned rather than arriving separately.
Repayment
Repayment runs between three and seven years after an initial moratorium set by the financing bank. The scheme does not fix the moratorium length, so treat any specific figure you are quoted as that lender's practice rather than a scheme rule. PMEGP does not set an interest rate. The guidelines say only that the normal rate of interest is charged, so the bank prices the loan on its own benchmark and your profile. Anyone quoting you a fixed PMEGP interest rate is describing one lender's offer, not the scheme. KVIC, the State KVIB or the District Industries Centre screens your application and a district-level task force interviews you, but neither sanctions the loan. The bank does, on its own credit assessment, and it can decline a file the task force has recommended. Loans Got Easy is a loan advisory and Direct Selling Agent. We help prepare and place the file. We do not sanction, approve or disburse, and we cannot influence a scheme outcome - that decision belongs to the lending institution.
Frequently Asked Questions
The scheme caps subsidy-eligible project cost rather than loan size: ₹50 lakh for manufacturing and ₹20 lakh for service or business. Bank finance covers around 90% to 95% of that cost depending on your category.
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Loans Got Easy is a loan advisory and Direct Selling Agent. We help prepare and place the file. We do not sanction, approve or disburse, and we cannot influence a scheme outcome - that decision belongs to the lending institution.