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The Union Cabinet has cleared the Employment Linked Incentive (ELI) Scheme to generate more than 3.5 crore jobs between August 2025 and July 2027, focusing on first-time employees and boosting the manufacturing sector.
India's Union Cabinet, chaired by Narendra Modi, Prime Minister has approved the Employment Linked Incentive (ELI) Scheme with an outlay of Rs99,446 crore. The scheme aims to incentivise job creation across sectors, with particular emphasis on the manufacturing industry.
Scheduled for implementation from 1 August 2025 to 31 July 2027, the scheme targets the creation of more than 3.5 crore jobs, including about 1.92 crore first-time employees entering the workforce.
Incentive for first-time employees
Under the scheme’s first component, individuals registering with the Employees’ Provident Fund Organisation (EPFO) for the first time and earning up to Rs1 lakh per month are eligible for a one-time incentive equivalent to one month’s EPF wage, capped at Rs15,000.
This incentive will be disbursed in two instalments:
- The first after six months of service,
- The second after 12 months of service and upon completion of a financial literacy programme.
Additionally, a portion of the incentive will be kept in a savings period for a fixed period, which the employee can withdraw later. This is meant to encourage the habit of saving.
Employer incentives for job creation
The second component of the scheme incentivises employers for each additional employee hired earning up to Rs1 lakh per month.
The monthly incentive rates are as follows:
- Up to Rs1,000 for employees earning up to Rs10,000
- Rs2,000 for those earning more than Rs10,000 and up to Rs20,000
- Rs3,000 for salaries more than Rs 20,000 up to Rs100,000
To qualify, employers with fewer than 50 employees must hire at least two additional workers, while those with 50 or more employees must hire at least five additional workers. The new hires must be retained for a minimum of six months.
Employers will receive incentives of up to Rs3,000 per month for each additional employee with sustained employment for at least six months. In the manufacturing sector, employer incentives will continue into the third and fourth years to support ongoing job creation.
Payment and monitoring mechanisms
Payments under the first component (for employees) will be made through Direct Benefit Transfer (DBT) via the Aadhaar Bridge Payment System.
For employer incentives, payments will be credited directly to their PAN-linked bank accounts.
Anticipated impact and significance
Through the ELI Scheme, the government aims to drive job creation across all sectors, with a stronger push in manufacturing. The scheme also seeks to support young people entering the workforce for the first time, while advancing workforce formalisation by expanding social security coverage to millions of youths across the country.
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