Government data show strong support for small projects under PMEGP over the last five years, with easier credit access, collateral-free loans and grievance redressal through the CHAMPIONS portal boosting entrepreneurship.
TFP Bureau, New Delhi, February 2, 2026: The Prime Minister’s Employment Generation Programme (PMEGP) has played a significant role in promoting small-scale entrepreneurship and employment generation across the country, with a large majority of supported units involving project costs of up to ₹10 lakh, according to official data shared in Parliament.
During the last five financial years, from 2020–21 to 2024–25, around 63 per cent of units assisted under the manufacturing sector and as many as 93 per cent of units under the service sector had project costs not exceeding ₹10 lakh. This highlights the programme’s strong focus on encouraging grassroots entrepreneurship and supporting first-time entrepreneurs through small, viable projects.
PMEGP is a central sector scheme aimed at assisting prospective beneficiaries in setting up new micro-enterprises, primarily through small loans supported by government subsidies. The programme is designed to generate self-employment opportunities, particularly in rural and semi-urban areas, while strengthening the micro and small enterprise ecosystem.
To further facilitate access to credit and subsidies for smaller projects, the Ministry of Micro, Small and Medium Enterprises (MSME) has introduced several supportive measures. Priority is being accorded to applications involving project costs below ₹10 lakh, ensuring that small entrepreneurs and individuals with limited capital are not crowded out by larger proposals.
In line with Reserve Bank of India (RBI) guidelines, banks are not permitted to insist on collateral security for PMEGP projects involving loans of up to ₹10 lakh. The MSME Ministry has reiterated strict compliance with this provision to all major banks, with the objective of removing a key barrier faced by small entrepreneurs while seeking formal credit.
In another facilitative step, the government has waived educational qualification requirements for setting up smaller projects. There is no minimum educational qualification required for manufacturing projects costing up to ₹10 lakh and for service sector projects costing up to ₹5 lakh, making the scheme more inclusive and accessible to a wider section of the population.
To strengthen grievance redressal and handholding support, the Ministry of MSME has operationalised the Creation and Harmonious Application of Modern Processes for Increasing the Output and National Strength (CHAMPIONS) portal. The integrated digital platform enables speedy, convenient and effective resolution of grievances related to PMEGP and other MSME schemes. It also provides guidance and advisory services, helps enterprises navigate government policies, and connects MSMEs with officials of the Ministry, state governments, lending institutions and other government agencies.
On the lending side, interest rates for PMEGP loans are determined by individual banks, as the RBI has deregulated interest rates on bank advances. These rates are linked to banks’ own credit assessment and underwriting policies within the regulatory framework prescribed by the central bank. However, RBI has issued directions to all regulated entities to ensure transparency, fairness and adequate disclosure of loan terms, enabling PMEGP beneficiaries to make informed financial decisions and preventing arbitrary recovery of interest.
The RBI has also instructed banks to accord priority in the sanctioning of projects under PMEGP, reinforcing the government’s intent to promote micro-enterprises as engines of employment and local economic growth.
This information was provided by the Minister of State for Micro, Small and Medium Enterprises, Sushri Shobha Karandlaje, in a written reply to a question in the Rajya Sabha on Monday. The data underlines the growing importance of PMEGP as a key policy instrument for nurturing small entrepreneurs and strengthening India’s MSME sector.
