PMEGP Subsidy: how much you get, and how you actually receive it
The PMEGP subsidy, formally called margin money, is 15% to 35% of project cost. A general category applicant gets 25% in a rural area and 15% in an urban area; a special category applicant gets 35% rural and 25% urban. It is calculated on the project cost, not the loan, and it is held by your bank as a term deposit for a three-year lock-in before being adjusted against your outstanding.
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on the unit running: it sits in a locked deposit for three years, and a unit that closes in that window can have it withdrawn and recovered.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 full matrix
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. Special category status is checked against documentation, so caste, disability, ex-servicemen or minority status needs a certificate in the file rather than a declaration.
How the money actually moves
The margin money subsidy is real, but it does not reach you as cash. The bank receives it and holds it as a term deposit in your name for a three-year lock-in, then adjusts it against your loan. It is a capital subsidy on the project, not an interest subsidy, and it does not reduce your rate. In practice this means a ₹20 lakh rural project for a special category applicant carries ₹7 lakh of subsidy, but the borrower still services a loan sized on the full project and sees the ₹7 lakh only as a reduction in outstanding after three years. Applicants who plan around receiving that money upfront run into a cash flow problem in year one.
What happens if the unit closes during the lock-in
The subsidy is conditional on the unit running. If the enterprise shuts, or the loan turns bad, during the three-year lock-in, the subsidy can be withdrawn and recovered rather than adjusted against your loan. This is why the scheme funds new units that are genuinely intended to operate, and why the task force interview probes whether the project is real. Treat the subsidy as earned across three years of trading, not as granted at sanction.
It is not an interest subsidy
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
As a percentage of total project cost, not of the loan. The percentage depends on your category and whether the unit is rural or urban, and ranges from 15% to 35%. A ₹50 lakh rural manufacturing project for a special category applicant attracts ₹17.5 lakh, the highest the scheme allows.
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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.