On July 1, 2025, Union Cabinet, chaired by Prime Minister Narendra Modi, approved the Employment Linked Incentive (ELI) Scheme, a large-scale initiative aimed at generating over 3.5 crore jobs across India within two years.
With a total outlay of ₹99,446 crore, the scheme is part of a broader ₹2 lakh crore employment and skilling package announced in the Union Budget 2024–25, targeting 4.1 crore youth.
The government designed the ELI Scheme to boost formal employment, especially in the manufacturing sector, and to enhance social security coverage and employability.
ELI Scheme Structure: Two-Part Framework
The ELI Scheme is structured into two components:
- Part A: First-Time Employee Benefits
- Part B: Employer Incentive Programme
Part A: Incentives for First-Time Employees
This component targets 1.92 crore individuals entering the formal workforce for the first time.
Key features include:
- Eligibility: Employees newly registered with the Employees’ Provident Fund Organisation (EPFO) and earning up to ₹1 lakh per month.
- Incentive: One month’s EPF wage (up to ₹15,000) paid in two installments:
- First installment after 6 months of continuous employment.
- Second installment after 12 months and completion of financial literacy training.
- Savings Component: A portion of the incentive will be retained in a savings account, accessible after a specified period to promote long-term financial discipline.
- Disbursement: Payments will be made via Direct Benefit Transfer (DBT) using the Aadhaar Bridge Payment System (ABPS).
Part B: Incentives for Employers
The government designed this segment to encourage employers to create and retain additional jobs, especially in labour-intensive manufacturing.
Key provisions include:
- Eligibility:
- Employers with less than 50 employees must hire at least 2 additional workers.
- Employers with 50 or more employees must hire at least 5 additional workers.
- Employers must retain new hires for a minimum of 6 months.
- Incentive Structure:
- For employees earning:
- Up to ₹10,000/month: ₹1,000/month
- ₹10,001–₹20,000/month: ₹2,000/month
- ₹20,001–₹1,00,000/month: ₹3,000/month
- For employees earning:
- Duration: Incentives will be provided for two years, with an extension to four years for the manufacturing sector.
- Disbursement: Funds will be transferred to PAN-linked bank accounts of eligible employers.
This component will support the creation of 2.6 crore additional jobs.
Implementation Timeline and Coverage
- Effective Period: The scheme will apply to jobs created between August 1, 2025, and July 31, 2027.
- Sectors Covered: All sectors are eligible, with manufacturing receiving extended benefits.
- Social Security Expansion: The scheme aims to bring more workers under EPFO coverage, thereby expanding formal employment.
Budgetary Allocation and Broader Context
The ELI Scheme is part of a five-scheme package under the government’s employment and skilling mission.
The total package is worth ₹2 lakh crore, with the ELI Scheme accounting for nearly half the allocation.
The initiative aligns with the government’s broader goals of:
- Boosting formal employment
- Enhancing workforce productivity
- Promoting financial inclusion
- Strengthening the manufacturing ecosystem
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