In 2025, the Union Cabinet approved the Employment Linked Incentive (ELI) Scheme, a transformative initiative aimed at driving large-scale employment generation and improving workforce participation among India’s youth. With a total outlay of ₹2 lakh crore, the scheme targets the creation of over 3.5 crore jobs within two years, benefiting approximately 4.1 crore young individuals. The focus is particularly strong on the manufacturing sector, seen as a vital engine for sustainable economic growth.
Key Components of the Employment Linked Incentive (ELI) Scheme
The ELI Scheme is structured into two distinct parts:
Part A – Support for First-Time Employees
This segment is dedicated to incentivising fresh entrants to the formal workforce:
- Eligible first-time employees registered under the Employees’ Provident Fund Organisation (EPFO) will receive a financial incentive equivalent to one month’s wage, up to ₹15,000.
- The payout is split into two instalments:
- First instalment after six months of continuous employment.
- Second instalment after twelve months, subject to successful completion of a financial literacy programme.
- To promote financial discipline, a portion of the incentive is held in a fixed deposit account.
Part B – Incentives for Employers
To encourage job creation, employers are also provided direct financial support:
- For each new hire earning a monthly wage of up to ₹1 lakh, employers will receive ₹3,000 per month.
- This incentive is offered for two years, with extended benefits for employers in the manufacturing sector.
- A minimum threshold of additional employment, based on the company’s existing workforce size, must be met to qualify.
Eligibility Parameters
- Employees must earn wages not exceeding ₹1 lakh per month.
- Employers must be registered with the EPFO and retain new hires for at least six months.
- The incentive amount varies by wage bracket, ensuring fair distribution across income levels.
Transparent Disbursement Mechanism
To ensure efficiency and transparency:
- Incentives for employees are disbursed through Direct Benefit Transfer (DBT) via the Aadhaar Bridge Payment System (ABPS).
- Employer payments are directly credited to PAN-linked bank accounts.
Projected Impact and Broader Goals
The ELI Scheme is a cornerstone in India’s strategy to:
- Formalise employment and expand social security coverage.
- Promote long-term youth engagement in formal sectors, especially manufacturing.
- Strengthen the country’s labour market dynamics by creating stable, incentivised employment opportunities.
This bold initiative marks a significant stride toward building a robust, inclusive, and future-ready workforce, aligning with India’s long-term development goals.
