AI SummaryKerala government is running Seed Capital Financial Assistance Scheme for Self Help Groups (SHGs) under the central PM FME Scheme. Kudumbashree members working in food processing units get seed capital up to ₹40,000 per member, with a cap of ₹4 lakh per SHG. Union government has extended PM FME Scheme till September 2026, so Kerala SHGs still get time to apply for this seed fund support.
What is Kerala Seed Capital Financial Assistance Scheme 2026
Seed Capital Financial Assistance Scheme was launched to give working capital support to SHGs under Pradhan Mantri Formalisation of Micro food processing Enterprises (PM FME) Scheme. Kerala state government runs this scheme through Kudumbashree Mission, and the amount goes to SHG federations first, who then pass it on as a loan to individual SHG members.
Kerala industry department had inaugurated this scheme in October 2021. Since then, Kudumbashree has released seed capital in phases to thousands of SHG members across all districts, and the scheme is still active as part of PM FME Scheme, which food processing ministry has extended till September 2026.
Assistance to SHGs as Part of PM FME Scheme
Central government runs PM FME Scheme in partnership with state governments to give incentives to micro food processing units. Expenditure under this scheme is shared between central and state governments in 60:40 ratio. Scheme gives money support, technical training, and business help to small food processing enterprises, including those run by SHGs.
PM FME Scheme also runs One District One Product (ODOP) component, under which one product from each district gets picked for support. This covers common facilities for procuring raw materials, and it helps widen the market for the product. Food processing ministry also helps entrepreneurs with logistics and branding support.
Eligibility for Seed Capital Assistance
Any woman member of a registered Self Help Group under Kudumbashree Mission can apply for this seed capital support, provided the SHG works in food processing activity or plans to start one. SHGs already registered under State Rural Livelihood Mission (SRLM) or State Urban Livelihood Mission (SULM) get priority, and groups working on ODOP products of their district get extra preference while giving out seed capital.
Assistance Amount to Self Help Groups
Seed capital support under this scheme comes in more than one form, based on what stage the SHG is at:
- Each member of the self-help group gets seed capital up to ₹40,000 for working capital and to purchase small tools, subject to a total cap of ₹4 lakh per SHG.
- Members of self-help groups running food processing units are entitled to a 35% credit-linked capital subsidy, subject to a maximum of ₹10 lakh.
- SHG federations can also get a 35% subsidy on capital investment through credit-linked grants, up to ₹3 crore for common infrastructure projects.
As per latest available Kudumbashree data, seed capital assistance of ₹21.49 crore has been released to more than 6,800 SHG members across Kerala under both SRLM and SULM categories. Kerala also ranks third among states for credit-linked subsidy loans, with over 3,400 loans sanctioned and ₹23.58 crore released as subsidy to over 900 beneficiaries.
Documents Required
SHG members applying for this seed capital need to keep a few basic documents ready. This includes Aadhaar card of all group members, SHG registration certificate, bank account details of the SHG and its federation, a business plan for the food processing unit, and ODOP category proof if the group is applying under district product priority.
How to Apply for Seed Capital Support
SHG members do not apply directly on any online portal for this fund. Process runs through Kudumbashree Mission and local self-government bodies.
STEP 1 - SHG members contact their local Kudumbashree Community Development Society (CDS) office and register interest in Seed Capital Financial Assistance Scheme.
STEP 2 - Group submits a business plan for the food processing unit along with required documents to the CDS or SHG federation.
STEP 3 - After verification, SHG federation forwards the application to State Nodal Agency (SNA) or SRLM/SULM for approval of seed capital.
STEP 4 - Once approved, seed capital amount gets credited to the SHG federation account, which then gives it as loan to individual members for machinery and working capital needs.
| Detail | Information |
|---|---|
| Scheme Name | Seed Capital Financial Assistance Scheme |
| Launched By | Kerala Government (Kudumbashree Mission) |
| Parent Scheme | PM FME Scheme (extended till September 2026) |
| Beneficiaries | Self Help Group (SHG) members in food processing |
| Seed Capital Amount | Up to ₹40,000 per member, max ₹4 lakh per SHG |
| Credit Linked Subsidy | 35%, max ₹10 lakh |
| Application Mode | Through Kudumbashree CDS office / SHG federation |
| Official Website | kudumbashree.org, pmfmekerala.org |
FAQ's
Is Kerala Seed Capital Financial Assistance Scheme still active in 2026?
Yes. Scheme runs as part of PM FME Scheme, which food processing ministry has extended till September 2026, so SHGs can still apply through Kudumbashree Mission.
How much seed capital does one SHG member get?
Each member can get up to ₹40,000, but total seed capital given to one SHG cannot cross ₹4 lakh.
Who runs this scheme in Kerala?
Kudumbashree Mission, along with State Rural and Urban Livelihood Missions, runs this scheme on ground and handles fund disbursement to SHG federations.
Can SHG members apply online for seed capital?
No separate online form exists for individual members. Applications go through the local Kudumbashree CDS office and SHG federation, who forward it to the SNA/SRLM for approval.
Source / Reference Link: https://mofpi.gov.in/en/pmfme/seed-capital-shg