Margin money support to set up a new unit
PMEGP
Margin money subsidy on a bank loan for a new micro enterprise, run by the Ministry of MSME through KVIC. It was approved for 2021-22 to 2025-26. The PMEGP portal, which we read on 24 October 2026, carries a notice that fresh applications are presently unavailable and will open once the competent authority approves the continuation of the scheme with revised guidelines. The press reported that the Ministry told the Rajya Sabha on 3 August 2026 that PMEGP was in continuation only up to 31 March 2026, that the Expenditure Finance Committee has met on continuing it for the next five years, and that further release of subsidy depends on that approval (we did not read the reply itself). We found no Cabinet or Ministry order of approval. The Union Budget 2026-27 does provide ₹4,500 crore for PMEGP, against ₹2,954.42 crore in the previous year's budget. The terms below are those of the last approved period and may change with the revised guidelines.
People setting up a new micro unit
- Subsidy on project cost through the bank loan: 25 percent in rural areas and 15 percent in urban areas for the general category, 35 percent in rural areas and 25 percent in urban areas for the special category
- The special category now includes applicants from aspirational districts and transgender applicants
- Project cost up to ₹50 lakh for manufacturing and ₹20 lakh for business or service units
- A second loan for upgrading an existing PMEGP, REGP or MUDRA unit, with subsidy of 15 percent (20 percent in the North East and hill states)
- Banks may not ask for collateral on loans up to ₹20 lakh
- New unit, with no earlier government subsidy; the applicant must be above 18 years
- At least Class 8 pass for a manufacturing project above ₹10 lakh or a business or service project above ₹5 lakh
- Udyam registration of the unit before the physical verification
Fresh applications are closed for now. Watch the PMEGP portal for the notice that they have reopened, then apply online and through the bank. Apply only on the official portal.