In a major employment-focused reform, the Union Cabinet chaired by Prime Minister Narendra Modi has approved the Employment Linked Incentive (ELI) Scheme, aiming to generate over 3.5 crore jobs across sectors with special emphasis on manufacturing. With a substantial outlay of nearly ₹1 lakh crore, the scheme seeks to boost first-time employment, support employers in creating new jobs, and extend social security benefits to India’s young workforce.
Why in News?
The ELI Scheme, announced in the Union Budget 2024–25 and approved by the Cabinet on July 1, 2025, is part of a larger employment and skilling package worth ₹2 lakh crore. It is designed to address unemployment challenges, promote formal job creation, and enhance youth employability, especially in the post-pandemic era. The scheme targets job creation from August 1, 2025, to July 31, 2027.
Aim & Objectives
- Create over 3.5 crore formal jobs in 2 years.
- Promote employment in manufacturing and other sectors.
- Support first-time employees and incentivize employers.
- Strengthen social security coverage through EPFO registration.
- Enhance financial literacy and promote savings culture among youth.
Structure of the ELI Scheme
Part A – Incentives to First-Time Employees
- Beneficiaries: 1.92 crore new employees registered with EPFO.
- Benefit: One-month wage up to ₹15,000 in two installments:
- First installment after 6 months of service.
- Second installment after 12 months + completion of financial literacy training.
- Eligibility: Salary up to ₹1 lakh/month.
- A portion of the incentive to be locked in savings instruments for future withdrawal.
Part B – Support to Employers
- Covers all sectors; special benefits for manufacturing.
- Incentives to employers for hiring additional employees (with sustained 6-month employment).
- Applicable only for employers registered with EPFO.
Minimum new hires required
- 2 employees (firms with <50 employees)
- 5 employees (firms with ≥50 employees)
Incentive Structure for Employers,
- Employee’s EPF Wage Slab Employer Incentive/Month
- Up to ₹10,000 Up to ₹1,000
- ₹10,001 – ₹20,000 ₹2,000
- ₹20,001 – ₹1,00,000 ₹3,000
- For manufacturing, incentives will be extended to the 3rd and 4th years.
Payment Mechanism
- Part A: Payments via DBT through Aadhaar Bridge Payment System.
- Part B: Payments to employers’ PAN-linked accounts.
Significance
- Catalyzes job creation post-COVID-19, especially for youth and first-time entrants.
- Encourages formal employment and EPFO registration.
- Boosts the manufacturing sector and aligns with ‘Make in India’ vision.
- Enhances employer accountability while promoting a financially aware workforce.
- Supports social and economic mobility for crores of Indians.
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