Background of the scheme
Considering the success of the PMEGP scheme, and as requested by the entrepreneurs/unitholders and also as recommended by Management Development Institute (MDI), Gurgaon, in its Evaluation Study Report, the Government approved continuation of PMEGP beyond 12th five-year Plan for a period of 3 years from 2017-18 to 2019-20 with a financial outlay of Rs. 5,500 Crores. While giving such approval, a provision has also been made for sanctioning a 2nd loan with Subsidy for upgrading the existing units, which are performing well in terms of turnover profit making and loan repayment.
Objective of the scheme
1.To fulfill the need of additional financial assistance for upgrading and expansion to the successful / well-performing units.
2.To cater to the need of the entrepreneurs for bringing new technology/ automation so as to modernize the existing unit.
3.To enhance the productivity of the existing units with the inclusion of additional dose of funding.
4.To enhance the capacity of the existing unit with the additional financial assistance assuring additional wage employment.
Administration of scheme
Prime Minister’s Employment Generation Program (PMEGP) is a credit linked subsidy Program administered by the Ministry of Micro, Small and Medium Enterprises, Government of India.
Concerned bodies in charge of Scheme Implementation
The scheme will be implemented by KVIC, a Statutory Body created by Khadi and Village Industries Commission Act, 1956, which will be a single National-level Nodal Agency. At the State level, the scheme will be implemented through State Directors of KVIC, State KVIBs and District Industries Centers in rural areas. In urban areas, the scheme will be implemented by the State District Industries Centers (SDIC) only. KVIC will coordinate with State KVIBs, State DICs and monitor the performance of the Units in both in rural and urban areas.
Quantum and Nature of financial assistance
1.Maximum cost of the project/unit admissible under manufacturing sector for up-gradation is Rs.1.00 Crore, and the maximum subsidy would be Rs.15lakhs (Rs.20 lakhs for NER and Hill States).
2.The maximum cost of the project/unit admissible under Service/Business sector for up-gradation is Rs.25 lakhs, and the maximum subsidy would beers. 3.75 lakhs (Rs. 5 lakhs for NER and Hill States).
3.The balance amount of the total project cost will be provided by bank as term loan. The applicant can utilize the loan amount for investment on fixed assets i.e. for construction of building/purchase of required new machinery/ Installation of machinery etc.
4.Under the term loan component (construction of building/industrial shed, machinery & equipment etc.), the construction of own building may be included and ceiling of construction should not usually exceed 25% of the total sanctioned project cost.
5.The capital expenditure component including cost of construction should be up to 60% of the total project cost. The working capital cost would be 40%.However; the financing bank can decide the criteria at the time of sanction of loan based on the nature of the project.
Eligibility Criteria
Eligible borrowers under this scheme
1.All existing units financed under PMEGP/MUDRA Scheme whose margin money claim has been adjusted and the first loan availed should have been repaid in stipulated time are eligible to avail the benefits.
2.The unit should have been making profit for the last three years.
3.Beneficiary may apply to the same financing bank, which provided first loan, or to any other bank, which is willing to extend credit facility for second loan.
4.Registration of Udyog Aadhar Memorandum (UAM) is mandatory.
5.The 2nd loan should lead to additional employment generation.
Eligible lending institutions under this scheme
1.All Public Sector Banks.
2.All Regional Rural Banks.
3.Cooperative Banks approved by State Level Task Force Committee headed by Principal Secretary (Industries/MSME)/Commissioner (Industries).
4.Private Scheduled Commercial Banks approved by State Level Task Force Committee headed by Principal Secretary (Industries/MSME)/Commissioner (Industries).
5.Small Industries Development Bank of India (SIDBI).
How to apply for upgradation under PMEGP scheme
On PMEGP e-portal, a separate application link will be given for submitting application by the existing units for up-gradation. Click on below mentioned link for application
https://www.kviconline.gov.in/pmegpeportal/pmegpIILOAN/index.jsp
The State/District-level Agencies (KVIC/KVIB/DIC), after preliminary scrutiny, will forward the application to the Bank opted by the beneficiary in the application. Before recommending the application to the Banks, the State/District-level agencies will ensure that the application is complete in all respects and the applicant has fulfilled all the criteria mentioned in the guidelines. The agencies shall complete the scrutiny of the application within 15 days, and forward the application to the Banks, if the application is found to be order. In case, the application is not in order, they may return the application along with reasons, within 15 days.
The concerned bank will appraise and sanction the project proposal within 60 days. After release of loan, the Bank will claim Margin Money Subsidy(MMS) as per the procedure prevalent for PMEGP units. The MMS will be kept as Term Deposit Receipt (TDR) for 18 months. No interest will be paid on the TDR and no interest will be charged on the corresponding amount of the loan disbursed. The TDR amount will be adjusted in the loan account after installation of the machinery and on the basis of positive report of a joint physical verification of the implementing agency and the Bank.
Joint physical verification of the unit by the implementing agencies and the Banks shall be undertaken at least twice in a year and details of the joint physical verification will be uploaded on the Portal. Geo-tagging of all the units will be done by KVIC. Third party physical verification shall be conducted by KVIC through outsourcing an independent agency, on completion of two years of upgradation. CGTMSE Coverage: The beneficiary may opt for covering the project under CGTMSE Scheme by paying requisite CGTMSE fees.
List of documents required for applications: –
1.Previous ‘loan sanction letter’ issued by the Bank, Proof of ‘MM claims adjusted against previous loan’ and ‘Bank Certificate for full loan repayment’.
2.Project report for expansion/upgrading the unit.
3.Passport size photograph.
4.IT returns for the last 3 years.
5.Annual accounts certified by Chartered Accountant for the last 3 years.
Miscellaneous:
The main objective of the scheme is to assist the well-performing units for upgrading the units. The other points, which are already covered in the ongoing existing PMEGP scheme, related to eligibility of the beneficiary units, negative list, procedure for claiming the margin money by the banks and release of the margin money subsidy through existing e-portal and retaining the subsidy in TDRshall also be applicable for 2nd financial assistance.