Which government scheme fits your business?

Start with the business, then select the route

Write down these facts before comparing percentages:

1. What will the unit actually do: manufacture, process, store, trade or provide a service?
2. Is this a genuinely new unit, an expansion, or an upgrade of an existing enterprise?
3. What is the exact village, urban area, district and taluka? Where the unit operates matters more than where its owner lives.
4. How much will go into eligible machinery and building, how much into land, and how much into working capital?
5. Who owns the enterprise, in what legal form, and can any category-based eligibility be documented?
6. Has it already received a government subsidy, placed equipment orders, started construction or begun commercial production?
7. How much money can the promoter put in without depending on an unapproved subsidy?

The answers often eliminate unsuitable schemes before a detailed application is written.

Route 1: PMEGP for a new non-farm micro-enterprise

PMEGP combines bank finance with a margin-money subsidy. The official terms published for new units provide a subsidy-supported project-cost ceiling of ₹50 lakh for manufacturing and ₹20 lakh for services. General-category applicants contribute 10%; their subsidy rate is 15% in urban areas and 25% in rural areas. Special-category applicants contribute 5%; the corresponding subsidy rates are 25% and 35%. These are category-and-location rules, not a choice of the highest available percentage. Official MSME Ministry explanation

The December 2023 guidelines require applicants to be over 18. For projects above ₹10 lakh in manufacturing or ₹5 lakh in business/services, at least an eighth-standard pass is required. The ordinary new-unit route excludes existing units and units that have already received government subsidy. Projects need capital expenditure; land cost is excluded. Udyam registration is required before physical verification and margin-money adjustment. Check the current official PMEGP portal alongside the older guidelines for the age, education, capital-expenditure, land-exclusion and Udyam requirements. The guidelines also contain a separate upgrading route for qualifying successful PMEGP/REGP/MUDRA units. Do not apply its conditions to every existing business. Current official PMEGP portal, Revised PMEGP guidelines, 7 December 2023

October 2026 status

The 2023 document refers to the approved FY2021–22 to FY2025–26 cycle. Official FY2026–27 budget material allocates ₹4,500 crore to PMEGP and sets outputs for new or upgraded enterprises. A May 2026 Ministry release discusses strengthening the forthcoming cycle. These support continued programme activity, but this review did not locate a replacement multi-year approval establishing a new sunset date. Confirm the current sanction terms for your application; do not infer a five-year extension from a budget allocation. Union Budget output framework, MSME Ministry release, 7 May 2026

What this means for your cash plan

Keep the promoter contribution, bank sanction and subsidy treatment separate. A subsidy percentage is not a promise that the same amount will be handed to you before you purchase machinery. The application declaration itself makes margin money conditional on eligibility, admissibility and available funds. A bank still assesses viability. Official PMEGP application notice

Before applying, assemble a project report, identity and education evidence, applicable category and rural-location evidence, quotations, premises documents and the lender’s required financial records. Check the actual current portal checklist rather than buying a generic “complete application package.” Do not pay for equipment on the assumption that a later PMEGP application will reimburse it.

Route 2: AIF for eligible agriculture infrastructure

The Agriculture Infrastructure Fund is relevant to post-harvest management infrastructure and community farming assets. Official examples include storage, grading and cold-chain facilities. It is a debt-financing framework with interest support and eligible credit-guarantee support, not a general capital grant for any agricultural business. A February 2026 Ministry release confirms 3% annual interest subvention and credit-guarantee support for eligible loans up to ₹2 crore. Agriculture Ministry release, 3 February 2026

The application-window warning matters

Fresh-project financing availability for October 2026 has not been established in this review. The September 2024 guidelines distinguish the scheme’s overall operating period from its loan-disbursement period, and later continuation arrangements require separate verification. Before relying on AIF for a new project, obtain the latest operative circular and written confirmation from the implementing agency or lender covering fresh sanctions, disbursement deadlines and the proposed project. Do not infer new-project eligibility from the scheme’s overall end date, a budget allocation or an announcement about existing commitments.

September 2024 guidelines, section 4 — historical evidence

Processing: define the complete process

The August 2024 Cabinet expansion included integrated primary and secondary processing. Standalone secondary processing remained excluded from AIF and was directed towards MoFPI schemes. Thus “food processing” alone is too broad a description for an eligibility answer. Prepare the process flow, identify the incoming produce, each transformation, storage and handling stages, final output and separately costed assets. A standalone primary-processing project should not be confused with an excluded standalone secondary-processing project. The authority must map the actual process to its eligible-activity list. Cabinet decision, 28 August 2024

The published financing framework provides interest support for up to seven years on the eligible loan amount, limited to ₹2 crore even if a larger loan is sanctioned. Convergence provisions permit other qualifying central or state assistance, with a minimum promoter contribution of 10% of project cost. That is not blanket permission to claim the same asset or interest payment twice. The other scheme’s rules still have to allow the combination. AIF financing terms, Published AIF convergence provisions

Route 3: State incentives for the exact unit and location

State schemes can change the economics of a location, especially where assistance depends on industrial-area classification, employment, exports or eligible fixed capital investment. A headline percentage is insufficient for choosing a site.

Our initial comparison covers Rajasthan, Gujarat, Madhya Pradesh and Maharashtra. It is not an all-India ranking. Gujarat introduced a 2026 policy; Madhya Pradesh and Maharashtra have 2025 policies. Using a familiar older table without checking transition provisions can produce the wrong answer. See the companion state comparison for the verified policy trail and remaining checks.

Can two schemes be combined?

Use a claim-by-claim test:

• Identify the exact asset, invoice, loan interest or tax payment being supported
• Read each scheme’s exclusions, prior-assistance rules and convergence provisions
• Separate genuine additional investment from assets already subsidised
• Apply the individual cap and the combined cap, where one exists
• Obtain written treatment from the relevant authority before depending on the combination

An AIF convergence clause cannot automatically override PMEGP’s restrictions. Nor does a state policy’s promise of “additional assistance” mean every central subsidy can be added. Ask for a project-specific answer, with the relevant provisions identified.

Build the project so it survives delayed assistance

Prepare a base case without unapproved subsidy receipts. Then add a separate approved-support case, with the expected claim and receipt dates. Show the cash needed for commissioning, inventory, customer credit, wages and power before the first sale is collected.

Stress-test lower capacity utilisation, slower customer collections, reduced saleable yield, higher raw-material prices and a delay in commissioning. These are planning scenarios, not forecasts. A business that works only when the highest subsidy arrives immediately needs redesign before it needs a more elaborate application.

Your next step

Create a one-page eligibility brief with the seven facts at the start of this guide. Attach the machinery quotations and process flow. Ask the relevant implementing agency and proposed lender to confirm activity classification, eligible costs, new-versus-existing treatment, application timing and any intended scheme combination. Retain the written answer with your project report.

Government assistance can strengthen a viable enterprise. The useful question is how much support your particular project can lawfully claim, on which cost, and on what timetable.

Source and review note

Sources above are government notifications, official portals, budget documents and official releases. Policy announcements, scheme operation and individual sanction are different stages. No application or loan approval is represented as guaranteed. Unknown current terms are deliberately left unpriced. Recheck the operative documents before financial commitment.