The Union Cabinet has approved the Employment Linked Incentive (ELI) Scheme with an ambitious outlay of ₹1 trillion, aimed at accelerating employment generation, enhancing workforce skills and extending social security coverage across all sectors, with a particular focus on manufacturing. Designed as a central component of the Prime Minister’s 2024–25 employment and skilling package worth ₹2 trillion, the ELI Scheme seeks to support the creation of more than 35 million jobs over the next two years, including 19.2 million first-time workforce entrants.
The scheme will incentivise job creation between 1 August 2025 and 31 July 2027 through a two-part structure:
Part A focuses on first-time employees registered under the Employees’ Provident Fund Organisation (EPFO). Eligible employees earning salaries up to ₹100,000 will receive the equivalent of one month’s EPF wage—up to ₹15,000—paid in two instalments. The first instalment will be disbursed after six months of continuous service, and the second after 12 months, contingent on completion of a financial literacy programme. A portion of the incentive will be deposited into a savings instrument to promote financial discipline, accessible at a later date.
Part B targets employers across all sectors generating sustained additional employment, with extra incentives for the manufacturing sector. Establishments must be EPFO-registered and hire at least two additional workers (for firms with fewer than 50 employees) or five (for those with 50 or more), each retained for a minimum of six months. Employers will be eligible for monthly incentives up to ₹3,000 per employee for two years. In the manufacturing sector, incentives will continue for a third and fourth year.
The employer incentive structure is tiered based on the EPF wage of the new hires:
- Up to ₹10,000: up to ₹1,000 per month (proportional)
- ₹10,001 to ₹20,000: ₹2,000 per month
- ₹20,001 to ₹100,000: ₹3,000 per month
All employee payments under Part A will be made through Direct Benefit Transfer (DBT) using the Aadhaar-Based Payment System (ABPS). Employer incentives under Part B will be credited directly to their PAN-linked accounts.
The ELI Scheme is projected to formalise substantial portions of India’s informal workforce by extending employment-linked social security benefits and encouraging companies to hire sustainably. It also seeks to improve employability, bolster household savings, and drive inclusive growth, especially in labour-intensive sectors.
