Employment Linked Incentive scheme to create 3.5 crore jobs in 2 years
The ELI scheme was initially announced in the Union Budget 2024-25 as part of a comprehensive package of five schemes
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BABU
In a significant move to boost job creation, the Union Cabinet on Tuesday gave its nod to an Employment-Linked Incentive (ELI) scheme with a substantial outlay of ₹1.07 lakh crore. This initiative is designed to incentivise the creation of 3.5 crore jobs over the next two years.
Information & Broadcasting Minister Ashwini Vaishnaw stated in a media briefing: “The scheme aims to support job generation, enhance employability and social security across all sectors, with special focus on the manufacturing sector.” The ELI scheme is structured to provide incentives to both employees and employers to significantly boost job creation. This scheme is set to become effective from August 1.
The ELI scheme was initially announced in the Union Budget 2024-25 as part of a comprehensive package of five schemes. This broader package, with a total budget outlay of ₹2 lakh crore, aims to facilitate employment, skilling, and other opportunities for 4.1 crore youth.
Under the scheme, as approved by the Cabinet, an estimated 1.92 crore beneficiaries will be first-time entrants into the workforce. The benefits of the scheme will apply to jobs created between August 1, 2025, and July 31, 2027. The plan is divided into two distinct parts: Part A, which focuses on first-time employees, and Part B, which targets employers.
First-time employees
Specifically targeting first-time employees who are registered with EPFO, Part A of the scheme will offer a one-month wage up to ₹15,000 payable in two instalments. Employees with salaries up to ₹1 lakh will be eligible for this benefit. The first instalment will be disbursed after six months of service, with the second instalment payable after 12 months of service, contingent on the employee’s completion of a financial literacy program.
A government statement clarified: “To encourage the habit of saving, a portion of the incentive will be kept in a savings instrument or deposit account for a fixed period and can be withdrawn by the employee at a later date. Part A will benefit around 1.92 crore first-time employees.”
Part B of the scheme is designed to cover the generation of additional employment across all sectors, with a particular emphasis on the manufacturing sector. Under this component, employers will receive incentives for employees with salaries up to ₹1 lakh. The government will incentivize employers with up to ₹3,000 per month for two years for each additional employee who maintains sustained employment for at least six months. For the manufacturing sector specifically, these incentives will be extended to cover the third and fourth years as well.
To qualify for Part B, establishments registered with EPFO will be required to hire a minimum of two additional employees (for employers with fewer than 50 employees) or five additional employees (for employers with 50 or more employees). These new hires must be maintained on a sustained basis for at least six months.
Commenting on the employment-linked incentive scheme cleared by the Cabinet today, Chandrajit Banerjee, Director General, CII, hailed it as a significant step towards boosting employment and formalizing India’s workforce. He elaborated, “ELI scheme opens doors for first-time job seekers, empowering them to contribute meaningfully to India’s growth story. It empowers employers to expand their workforce and gives a decisive push to India’s labour-intensive sectors.”
Neeti Sharma, CEO at Teamlease Digital, also shared her perspective, viewing the scheme as a major step towards creating many more formal job opportunities in India. She further noted, “By offering wage support to employers and first-time job seekers, workers, it will help in improving long-term employment opportunities, especially in MSMEs and the manufacturing sector.”
Published on July 1, 2025
