Starting and sustaining a business often boils down to having access to resources, particularly funding. For aspiring entrepreneurs in India, the government has introduced several schemes aimed at promoting entrepreneurship and fostering a vibrant economy. Among them, the Stand Up India Scheme and the PMEGP Scheme stand out as prominent options. Both programs aim to support businesses, albeit with differing goals and eligibility criteria. If you’re wondering which one suits your business needs, let’s explore the details of these schemes in depth to help you make an informed decision.
Understanding the Stand Up India Scheme
The Stand Up India Scheme was launched in April 2016 by the Government of India to empower underrepresented segments in entrepreneurship, specifically Scheduled Castes (SC), Scheduled Tribes (ST), and women. This scheme provides financial assistance to entrepreneurs looking to start or expand their enterprises.
Key Features of the Stand Up India Scheme:
1. Eligibility Criteria:
– The beneficiary must be either a woman entrepreneur or belong to the SC/ST category.
– The business should be in the manufacturing, service, or trading sectors.
– The entrepreneur must not be a defaulter to any bank or financial institution.
2. Loan Amount:
– Under this scheme, loans ranging from Rs. 10 lakh to Rs. 1 crore can be availed. The loan covers 75% of the project’s cost, with the entrepreneur expected to contribute 10% of the capital required.
3. Purpose of Loan:
– Funding is targeted at greenfield projects, meaning businesses that are newly established and set up from scratch, rather than expanding or modernizing an existing one.
4. Government Support:
– Assistance in obtaining loans via designated banks and guidance on building business plans.
– There is provision for handholding and mentorship through various channels, including training programs.
5. Repayment Period:
– The Stand Up India Scheme features flexible repayment tenures, extending up to 7 years, with a maximum moratorium period of 18 months.
By focusing on creating opportunities for women and SC/ST entrepreneurs, the Stand Up India Scheme aims to promote social equity and support businesses in underserved communities.
Understanding the PMEGP Scheme
The Prime Minister’s Employment Generation Programme (PMEGP) scheme operates under the joint collaboration of the Ministry of Micro, Small, and Medium Enterprises (MSME), Khadi and Village Industries Commission (KVIC), and District Industry Centres. The PMEGP Scheme is tailored to facilitate self-employment and generate sustainable wage-based businesses.
Key Features of the PMEGP Scheme:
1. Eligibility Criteria:
– Applicants must be 18 years or older with basic knowledge of the business venture they intend to undertake.
– Institutions, including registered service co-operatives and self-help groups, are eligible.
– No prior experience is required, which makes this scheme accessible for any first-time entrepreneur.
2. Loan Amount:
– Loans are provided as a combination of margin money subsidy from the government and bank credit.
– The maximum cost of a project can be Rs. 25 lakhs for manufacturing enterprises and Rs. 10 lakhs for service or trading enterprises.
3. Subsidy Rates:
– Subsidy varies based on the location and category of the applicant, ranging between 15% to 35%, with higher benefits for special categories like SC/ST entrepreneurs and women-enabled projects in rural areas.
4. Purpose of Loan:
– It supports the creation of new micro-enterprises and small-scale industries across manufacturing, handicrafts, service industries, or cottage industries.
5. Government Support & Training:
– Formal entrepreneurship development training is mandatory for applicants under this scheme.
– Guidance is offered for preparing a project report, financing, and business operation for 2-4 weeks.
The PMEGP Scheme is focused on creating employment opportunities by nurturing micro-industry ecosystems, particularly for rural and semi-urban India.
Key Differences: Stand Up India vs. PMEGP Scheme
While both schemes aim to boost entrepreneurship, they differ significantly in their structure, goals, and target audience. Here’s a comparative analysis:
1. Eligibility:
– The Stand Up India Scheme caters exclusively to SC/ST entrepreneurs and women, whereas the PMEGP Scheme is open to anyone, regardless of caste, gender, or socio-economic background.
– In PMEGP, beneficiaries must have some form of business knowledge or industrial awareness, but Stand Up India has no compulsory prior knowledge requirements.
2. Funding Amount:
– Stand Up India offers loans between Rs. 10 lakh and Rs. 1 crore, making it viable for comparatively larger ventures.
– PMEGP, on the other hand, caps funding at Rs. 25 lakh for manufacturing and Rs. 10 lakh for service industries.
3. Focus on New Businesses:
– Stand Up India primarily emphasizes greenfield projects, encouraging first-time entrepreneurs to start new businesses.
– PMEGP allows funding for modernization or scaling up existing initiatives as well as new ventures in small-scale industries.
4. Support Ecosystem:
– The Stand Up India Scheme provides handholding support, bridging gaps in entrepreneurial knowledge through mentorship programs and training.
– PMEGP mandates business training workshops for applicants—even if they are already familiar with running enterprises.
5. Inclusivity and Subsidy:
– Stand Up India focuses heavily on building equity for marginalized communities, while PMEGP promotes overall growth in microenterprise sectors, benefiting broader demographics.
– PMEGP offers direct subsidies, while Stand Up India uses a fixed lending structure to ensure accountability for capital utilization.
6. Type of Entrepreneurs:
– If you are seeking significant funding for a standalone venture and belong to SC/ST or are a woman entrepreneur, Stand Up India is likely more tailored to your needs.
– Alternatively, if you are establishing micro-enterprises, especially family-led businesses, or wish to excel in craftsmanship, PMEGP could suit your requirements better.
Conclusion
Both the Stand Up India Scheme and the PMEGP Scheme offer excellent opportunities for entrepreneurs across India but cater to different needs. Stand Up India empowers women and SC/ST entrepreneurs to champion larger greenfield projects, while PMEGP fuels the creation of widespread employment through small and micro-enterprises.
