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Ex-servicemen who want to start their own business can get up to 35% of the project cost as a Government subsidy under the Prime Minister’s Employment Generation Programme (PMEGP). The scheme is running in 2026-27: on 28 October 2026, the MSME Ministry released ₹1,000 crore of PMEGP subsidy for 11,333 new micro enterprises.

How much subsidy do ex-servicemen get?

Ex-servicemen are in PMEGP’s special category, so they get a higher subsidy and put in less of their own money.

The most you can get is ₹17.5 lakh, on a ₹50 lakh manufacturing unit in a village. For a ₹20 lakh service unit in a village, it is ₹7 lakh.

How the subsidy works?

Example: a retired Havildar opens a ₹20 lakh vehicle repair workshop in his village.

The subsidy is not paid in cash. The bank keeps it as a fixed deposit for three years and charges no interest on that part of the loan. After three years, if the unit is running, it is adjusted against the loan. If the loan turns bad before that, the subsidy goes back to KVIC.

Who can apply?

• Any ex-serviceman above 18 years. There is no income limit, so a pension does not stop you
• Class 8 pass is needed only for manufacturing projects above ₹10 lakh and service projects above ₹5 lakh
• Only new units qualify, and only one person per family (you and your spouse count as one)
• A plain buy-and-sell shop, such as a kirana store, generally does not qualify

How to apply?

In short: prepare a project report, apply online as an ex-serviceman, and after the bank sanctions your loan, finish the EDP training (up to 10 days) and deposit your 5%. The whole process usually takes a few months, so plan for that.

Keep in mind

• The loan carries the bank’s normal interest rate. Only the subsidy part is interest-free.
• In August 2026, the Government told Parliament that PMEGP’s approval ran up to 31 March 2026 and its extension was under consideration. Subsidy is still being released, but confirm the current rules with your DIC or KVIC office before you invest.
• Never pay an agent who promises approval. Applying is free.

This article explains PMEGP in simple words. The official guidelines, your implementing agency and your bank have the final word.

Sources

1. Delhi Khadi and Village Industries Board: Salient features of revised PMEGP (PDF)
2. Official PMEGP portal, Ministry of MSME
3. State Bank of India: PMEGP loan terms, subsidy deposit and interest
4. Lok Sabha reply on PMEGP subsidy rates and EDP training (PDF)
5. Central Bank of India: PMEGP negative list
6. All India Radio News, 29 October 2026: ₹1,000 crore PMEGP subsidy released
7. Entrepreneur India: 11,333 new units and 2026-27 subsidy figures
8. Kashmir Life, 3 August 2026: Rajya Sabha reply on PMEGP continuation
9. KNN India, 31 July 2026: PMEGP processing times (Lok Sabha reply)