Subsidy for Trading Business under MSME
Subsidy for Trading Business under MSME: PMEGP Loan, Mudra Scheme, and Feasibility Report Guide
Starting a trade firm in India has become easier thanks to different government subsidies and credit initiatives for MSMEs. If you intend to start a small retail, wholesale, or distribution trading business, you can take advantage of a variety of financial assistance programmes. These include the PMEGP loan, Mudra Yojana, and MSME-linked perks that lower your initial capital requirement. However, to qualify, a valid feasibility report must be provided.
This blog discusses the important subsidies accessible to trading enterprises in the MSME category, as well as how to benefit from a PMEGP loan, a Mudra loan, and a well-prepared feasibility report.

1. Subsidy for Trading Business under MSME
Although manufacturing and service organisations have always been fostered, the government has steadily expanded its support to trading businesses, particularly through the Udyam Registration (MSME portal). By registering as a Micro, Small, or Medium Enterprise, you are eligible for:
Collateral-free loans


Credit-linked capital subsidies


Interest subvention (2-3%)


Subsidies under schemes like CGTMSE, PMEGP, and Mudra


MSME subsidies for trading businesses often take the form of margin money assistance or reduced interest rates. While direct cash subsidies are uncommon, financial aid through lower debt commitments and tax breaks is significant.

2. PMEGP Loan for Trading Business
The Prime Minister’s Employment Generation Programme (PMEGP), run by KVIC (Khadi and Village Industries Commission), offers a project report loan to individuals planning to start micro-enterprises, including some categories of trading businesses.
Key PMEGP Loan Benefits:
Loan up to ₹25 lakh (manufacturing) and ₹10 lakh (service/trading)


Subsidy of 15% to 35% (based on category and area)


No income ceiling to apply


Minimum education required: 8th pass


To apply for the PMEGP loan, you must include a complete project study and feasibility report with your application. The trading activity should be consistent with the list approved by KVIC/KVIB/DIC.
Not all trading businesses are eligible. Only those engaged in value addition, packaging, or local job creation are considered.
The MSME subsidy for trading businesses provided by PMEGP makes capital-intensive setups more accessible for both rural and urban youth.

3. Mudra Loan for Trading Business
If you're starting a grocery shop, electronics store, garments trading unit, or even a small wholesale business, a Mudra loan is one of the most accessible finance options.
Mudra (Micro Units Development & Refinance Agency) offers funding under three categories:
Shishu (up to ₹50,000)


Kishore (₹50,001 – ₹5 lakh)


Tarun (₹5 lakh – ₹10 lakh)


There’s no collateral required, and most public and private sector banks offer Mudra loans under this scheme. You must submit a feasibility report, sales projections, and business registration details to apply.
The subsidy for trading business under MSME is not direct in the Mudra scheme, but low interest and flexible repayment make it a powerful support mechanism.

4. Importance of Feasibility Report
Whether applying under the PMEGP loan or the Mudra, a detailed feasibility report is your strongest tool. This report shows banks and nodal agencies that your business is viable, profitable, and worthy of financial support.
A feasibility report generally includes:
Business description


Market analysis


Investment requirement


Revenue & profit projections


Risk analysis


Repayment capacity


For both PMEGP loan and Mudra, a well-drafted feasibility report is critical. It boosts your credibility and speeds up the loan approval process. It also plays a vital role in receiving the subsidy for trading business under MSME by validating the sustainability of the business.
Conclusion
Accessing a subsidy for an MSME trading business has become easier thanks to initiatives such as the PMEGP loan and Mudra Yojana. These programmes aim to empower entrepreneurs by easing their financial burdens through subsidies, low-interest loans, and collateral-free lending. However, success is mostly dependent on a robust feasibility report and business plan.
If you intend to start a trade business, begin by registering with MSME, preparing a feasibility report, and applying through the relevant programme. With the correct paperwork and strategic vision, your dream of establishing a profitable trade firm can become a reality, thanks to government-backed financial backing. For additional information or assistance, please contact us or call us at +91-8989977769.