Production Linked Incentives Schemes in India

Prime Minister Employment Generation Programme (PMEGP)

The scheme is implemented by Khadi and Village Industries Commission (KVIC) functioning as the nodal agency at the national level. At the state level, the scheme is implemented through State KVIC Directorates, State Khadi and Village Industries Boards (KVIBs), District Industries Centres (DICs) and banks. In such cases KVIC routes government subsidy through designated banks for eventual disbursal to the beneficiaries / entrepreneurs directly into their bank accounts.

Nature of Assistance

The maximum cost of the project/unit admissible in manufacturing sector is INR 25 lakhs and in the business/service sector, it is INR 10 lakhs.

Categories of beneficiaries under PMEGP (for setting up of new enterprises) Rate of Subsidy (of project cost) 
Area Urban Rural
General Category 15% 25%
Special (including SC / ST / OBC
/Minorities/Women, Ex-servicemen,
Physically handicapped, NER, Hill
and Border areas etc. 
25% 35%
Who can apply?

Any individual, above 18 years of age. At least VIII standard pass for projects costing above INR 10 lakh in the manufacturing sector and above INR 5 lakh in the business / service sector. Only new projects are considered for sanction under PMEGP. Self Help Groups (including those belonging to BPL provided that they have not availed benefits under any other Scheme), Institutions registered under Societies Registration Act,1860; Production Co-operative Societies, and Charitable Trusts are also eligible.

Existing Units (under PMRY, REGP or any other scheme of Government of India or State Government) and the units that have already availed Government Subsidy under any other scheme of Government of India or State Government are NOT eligible.

How to apply?

The State/Divisional Directors of KVIC in consultation with KVIB and Director of Industries of respective states (for DICs) will give advertisements locally through print & electronic media inviting applications along with project proposals from prospective beneficiaries desirous of establishing the enterprise/ starting of service units under PMEGP.

The beneficiaries can also submit their application online here and take the printout of the application and submit the same to respective offices along with Detailed Project Report and other required documents.

Whom to contact? State Director, KVIC
Apply online here 
Dy. CEO (PMEGP), KVIC, Mumbai
Ph: 022-26711017
Email: ykbaramatikar.kvic@gov.in
Download Scheme Guidelines here
Guidelines for Second Financial Assistance under PMEGP for Expansion of the Existing Successful PMEGP/MUDRA units here


Credit Linked Capital Subsidy for Technology Upgradation (CLCSS)

To facilitate technology to MSEs through institutional finance for induction of well established and proven technologies in the specific and approved 51 sub-sector/products. Both upgradation projects (with or without expansion) and new projects are eligible.

Nature of Assistance

Upfront subsidy of 15% on institutional Credit upto INR 1 Crore (i.e. subsidy cap of INR 15 lakh) for identified sectors/ subsectors/ technologies. However, to be considered as eligible, for special benefits there is no restriction for identified sectors.

Who can apply?
  • Any Micro and Small Enterprise (MSE) having valid Udyam Registration and availing institutional credit to buy new Plant & Machinery approved under the scheme.
  • Special Benefits are applicable in case of SC/ST, Women, NER / Hill States / Aspirational Districts /LWE Districts. The subsidy shall be admissible for investment in acquisition /replacement of Plant & Machinery /equipment's & Technology up-gradation of any kind (Core plant & Machinery). Second hand & fabricated will not be eligible.
How to apply?

Applicant meeting the eligibility criteria should approach to loan lending bank branch / PLI. On behalf of applicant, the lending bank branch will examine & apply for subsidy claim through a dedicated online application & tracking management System (MIS), the application will reach to the Ministry through nodal Banks / Agencies. These are SIDBI, NABARD, SBI, BoB, Andhra Bank (Merged with UBI) and Corporation Bank (Merged with UBI).

Whom to contact?
  • Lending bank branch or Nodal Banks /Agency under the scheme
  • MSME-Development Institutes under Office of Development Commissioner
Download Scheme Guidelines here


Credit Guarantee Trust Fund for Micro & Small Enterprises (CGTMSE)

Ministry of Micro, Small and Medium Enterprises and Small Industries Development Bank of India (SIDBI) jointly established a Trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) in order to implement Credit Guarantee Scheme for Micro and Small Enterprises. The corpus of CGTMSE is contributed by Government of India and SIDBI. 75% of the loan amount to the bank is guaranteed by the Trust Fund.

Nature of Assistance

Collateral free loan up to a limit of INR 100 lakh is available for individual MSE on payment of guarantee fee to bank by the MSE.

Who can apply?

Both existing and new enterprises are eligible under the scheme.

How to apply?

Candidates meeting the eligibility criteria may approach banks / financial institutions, and select Regional Rural Banks which are eligible under the scheme. 


Whom to contact?

Ph: 022-61437805
Email: pradeepm@cgtmse.in

Ph: 011-23061726
Email: deepak.rao@nic.in
Download Scheme Guidelines here


2% Interest Subvention Scheme for MSMEs 2018

Encouraging both manufacturing and service enterprises to increase productivity and provide incentives to MSMEs for onboarding on GST platform which helps in formalization of the economy, while reducing the cost of credit.

Nature of Assistance

The interest relief will be calculated at two percentage points per annum (2% p.a.), on the outstanding balance from time to time from the date of disbursal/drawl or the date of notification of this scheme, whichever is later, on the incremental or fresh amount of working capital sanctioned or incremental or new term loan disbursed by eligible institutions

Who can apply?

All MSMEs who have valid GSTN Number and registered on Udyam portal. Trading activities with KYC are also eligible.

How to apply?

MSMEs may apply directly to eligible lending institutions under the scheme.

Whom to contact?
  • Lending bank branch
  • MSME - Development Institutes under Office of
  • Development Commissioner MSME
  • Email: prasenjit@sidbi.in
  • Phone: 011-23448404

Download Scheme Guidelines and FAQs:


INR 20,000 crores Subordinate Debt for Stressed MSMEs

  • Subordinate debt will provide a substantial help in sustaining and reviving the MSMEs which have either become NPA or are on the brink of becoming NPA.
  • Promoter(s) may infuse this amount in MSME unit as equity and thereby enhance the liquidity and maintain debt-equity ratio.
  • In a situation, where an outright loan is difficult, sub-debt with guarantee will provide the requisite financing to the MSME Units
Nature of Assistance
  • Promoter(s) of the MSMEs will be given credit equal to 15% of their stake (equity plus debt) or INR 75 lakh whichever is lower.
  • The maximum tenor for repayment will be 10 years. There will be a moratorium of 7 years on payment of principal.
  • Guarantee for the sub-debt: 90% guarantee coverage would come from the scheme / trust and remaining 10% from the concerned promoter(s)
Who can apply?

This Scheme seeks to extend support to the promoter(s) of the operational MSMEs which are stressed and have become NPA as on 30 April 2020

How to apply?

MSMEs meeting the eligibility criteria may approach eligible Banks

Whom to contact?
  • Lending bank branch
  • CEO, CGTMSE, SIDBI, Swavalamban Bhavan, C-11, GBlock, BKC, Bandra (East), Mumbai 400051
  • Email: ceosecretariat@cgtmse.in
  • Phone: (022)-67221553, 67221483
  • For General Queries please contact (Toll-Free No.): 1800222659

Download Scheme Guidelines:


Interest Subsidy Eligibility Certificate (ISEC)

The Interest Subsidy Eligibility Certificate (ISEC) Scheme is an important mechanism of funding khadi programme undertaken by khadi institutions. It was introduced to mobilise funds from banking institutions for filling the gap between the actual fund requirements and availability of funds from budgetary sources.

Nature of assistance Under the ISEC Scheme, credit at a concessional rate of interest of 4% per annum for working capital, is made available as per the requirement of the institutions. The difference between the actual lending rate and 4% is paid by the Central Government through KVIC to the lending banks.
Who can apply? The Khadi institutions, having valid Khadi certificate and sanctioned khadi programme.The Institutions registered with the KVIC/State Khadi and Village Industries Boards (KVIBs) can avail of financing under the ISEC Scheme, the Scheme supports only the khadi and the polyvastra sector.
How to apply? The Khadi institutions will apply to the financing bank for working capital along with the ISEC certificate issued by KVIC. Based on the working capital sanctioned, financing bank will raise the reimbursement claim to the nodal branch for the differential interest rate over and above 4%.
Whom to contact? Dy. CEO, KVIC
Ph: 022-26710021
Email: kvicecr@gmail.com
Download Scheme Guidelines here




Schemes for MSMEs in India