PMEGP in AP is the central government’s scheme that gives a bank loan with a subsidy of up to 35% to start a new small business — a manufacturing unit, a service unit or a trading unit.

If you want to start your own business but do not have the full capital, PMEGP is one of the best options. The government pays a part of the project cost as a subsidy, and the bank gives the rest as a loan. Here is how it works in Andhra Pradesh.

What Is PMEGP?

PMEGP — the Prime Minister’s Employment Generation Programme — is a credit-linked subsidy scheme run by the Khadi and Village Industries Commission (KVIC). It helps individuals start new micro-enterprises in manufacturing and services. The scheme is implemented through the KVIC, the State Khadi and Village Industries Board (KVIB) and the District Industries Centre (DIC) in each district.

Under PMEGP in AP, the applicant applies online, the project is appraised by the bank, and the subsidy is released to the bank after the loan is sanctioned and the unit is set up. The KVIC website at kvic.gov.in explains the scheme, and applications are made on the PMEGP portal. The AP government portal at ap.gov.in links to the industries department and the DIC.

PMEGP Subsidy Rates

The subsidy under PMEGP in AP depends on the category of the applicant and whether the unit is in a rural or urban area:

• General category, urban: 15% subsidy.
• General category, rural: 25% subsidy.
• Special category, urban: 25% subsidy.
• Special category, rural: 35% subsidy.

The special category includes SC, ST, OBC, minorities, women, ex-servicemen, physically handicapped persons and people from the North Eastern Region, hill and border areas. The beneficiary’s own contribution is 10% of the project cost for the general category and 5% for the special category. The remaining amount is a bank loan.

Who Can Apply for PMEGP in AP?

These conditions apply for PMEGP in AP:

• You must be 18 years or older.
• You must be setting up a NEW unit — existing units and units already financed under another scheme cannot apply.
• For a project above Rs 10 lakh in manufacturing or Rs 5 lakh in services, you must have passed at least the 8th standard.
• You must not have taken a subsidy under any other government scheme for the same project.
• Self-help groups, charitable trusts and cooperative societies can also apply, with conditions.

There is no income limit for PMEGP. The scheme is for any individual who wants to start a micro-enterprise, whether it is a small manufacturing unit, a service business or a shop.

How to Apply for PMEGP in AP

Follow these steps to apply for PMEGP in AP:

1. Visit the PMEGP portal and register as a new applicant.
2. Fill in the application with the project details — the type of unit, the project cost and the location.
3. Upload the documents: Aadhaar, PAN, project report, caste certificate (if claiming special category), and education certificate.
4. Submit the application and choose the implementing agency — KVIC, KVIB or DIC.
5. The agency will forward the application to the bank of your choice.
6. The bank appraises the project and sanctions the loan.
7. After the loan is disbursed and the unit is set up, the subsidy is released to the bank.

Prepare a simple project report before applying — it should show the cost of machinery, raw material, working capital and the expected income. The DIC in your district can help with the project report and the application. Ask at your Village or Ward Secretariat for the DIC office address.

What Businesses Can You Start Under PMEGP?

PMEGP covers a wide range of businesses. Some common examples in AP are:

• Food processing — pickle making, spice grinding, rice milling, dairy products.
• Tailoring and garment units, embroidery and readymade clothes.
• Repair services — mobile repair, two-wheeler repair, electrical repair.
• Beauty parlour, saloon and wellness services.
• Printing, photocopy and DTP services.
• Small manufacturing — paper plates, candles, agarbathi, soap, furniture.
• Retail shops and trading units.

Choose a business that fits the demand in your area and your own skills. A business that serves a local need — food, repair, tailoring — is more likely to survive than one that depends on a distant market.

PMEGP vs MUDRA Loan

People often ask whether to take PMEGP or a MUDRA loan. They are different. PMEGP gives a subsidy — a part of the project cost that you do not repay — but it is only for new units and the process is longer. A MUDRA loan is a plain bank loan with no subsidy, but it is faster and can be used for an existing business as well. If you are starting a new unit and can wait for the process, PMEGP is better because of the subsidy. If you need money quickly or already run a business, a MUDRA loan is the simpler option. Read our guide to the Kisan Credit Card for farm credit, which is a different kind of loan for farmers.

Common Problems and Solutions

Bank rejects the loan: check the project report and the repayment capacity; ask the bank for the reason in writing. Subsidy delayed: the subsidy is released after the unit is set up and the bank claims it — follow up with the bank and the implementing agency. Application stuck: contact the DIC or KVIB with the application number. Project cost too high: the maximum is Rs 50 lakh for manufacturing and Rs 20 lakh for services — reduce the project size or use your own funds for the excess. Wrong agency chosen: you can choose KVIC, KVIB or DIC when applying — pick the one nearest to you.

Frequently Asked Questions About PMEGP in AP

How much subsidy do I get under PMEGP in AP?

From 15% to 35% of the project cost, depending on your category and whether the unit is in a rural or urban area. The maximum is 35% for the special category in a rural area.

What is the maximum loan under PMEGP?

The maximum project cost is Rs 50 lakh for manufacturing and Rs 20 lakh for services. The bank loan covers the project cost minus your contribution and the subsidy.

Can I apply for PMEGP for an existing business?

No. PMEGP is only for new units. Existing businesses should look at a MUDRA loan instead.

Do I need to repay the subsidy?

No. The subsidy is a grant — it is not repaid. Only the bank loan has to be repaid, with interest.

Final Word

PMEGP in AP is a genuine chance to start your own business with the government’s help — a bank loan plus a subsidy of up to 35%. Prepare a good project report, apply on the PMEGP portal, and follow up with the DIC and the bank. Start small, keep the accounts clean, and repay the loan on time, because a good repayment record makes the next loan easier. The DIC and the bank are there to help — ask them if you get stuck. For the wider picture of schemes this year, see our guide to Andhra Pradesh schemes in August 2026.

Last updated: November 2026