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The Union Cabinet chaired by the Prime Minister, Narendra Modi, has approved the Employment Linked Incentive (ELI) Scheme to support employment generation, enhance employability and social security across all sectors, with special focus on the manufacturing sector.
Under the Scheme, first-time employees will receive one month’s wage (up to Rs 15,000/-). Employers will get incentives for two years for generating additional employment, with extended benefits for another two years in the manufacturing sector. The government announced the ELI Scheme in the Union Budget 2024-25 as part of the PM’s package of five schemes to create employment, provide skilling, and expand opportunities for 4.1 crore youth with a total budget outlay of Rs 2 lakh crore.
“ELI Scheme Targets 3.5 Crore Jobs with ₹99,446 Crore Outlay”
With an outlay of Rs 99,446 Crore, the ELI Scheme aims to incentivize the creation of more than 3.5 Crore jobs in the country, over a period of 2 years. Out of these, 1.92 Crore beneficiaries will be first timers, entering the workforce. The benefits of the Scheme would be applicable to jobs created between 01st August 2025 and 31st July, 2027.
The Scheme consists of two parts with Par A focused on first timers and Part B focused on employers:
ELI Scheme Part A: Incentive to First Time Employees:
Targeting first-time employees registered with EPFO, this Part will offer one-month EPF wage up to Rs 15,000 in two installments. Employees with salaries up to Rs 1 lakh will be eligible. The 1st installment will be payable after 6 months of service and the 2nd installment will be payable after 12 months of service and completion of a financial literacy programme by the employee. The employer will deposit a portion of the incentive in a savings account for a fixed period, and the employee can withdraw it at a later date to encourage the habit of saving.
The Part A will benefit around 1.92 crore first time employees.
Part B: Support to Employers:
This part will cover generation of additional employment in all sectors, with a special focus on the manufacturing sector. The employers will get incentives in respect of employees with salaries up to Rs 1 lakh. The Government will incentivize employers, up to Rs 3000 per month, for two years, for each additional employee with sustained employment for at least six months. For the manufacturing sector, incentives will be extended to the 3rd and 4th years as well.
Establishments registered with EPFO must hire at least two additional employees. This applies to employers with less than 50 employees. Employers with 50 or more employees must hire five additional employees. These hires must be made on a sustained basis for at least six months.
The incentive structure will be as under:
| EPF Wage Slabs of Additional Employee (in | Benefit to the Employer (per additional employment per month) |
| Up to Rs 10,000* | Upto Rs 1,000 |
| More than Rs 10,000 and up to Rs 20,000 | Rs 2,000 |
| More than Rs 20,000 (upto salary of Rs 1 Lakh/month) | Rs 3,000 |
*Employees with EPF wages up to Rs. 10,000 will get a proportional incentive.
This part is expected to incentivize employers for the creation of additional employment of nearly 2.60 crore persons.
Incentive Payment Mechanism:
All payments to the First Time Employees under Part A of the Scheme will be made through DBT mode. DBT stands for Direct Benefit Transfer. “The Aadhar Bridge Payment System (ABPS) will handle this. The authorities will make payments under Part B directly into the employers’ PAN-linked accounts.”
With ELI Scheme, the government intends to catalyse job creation in all sectors. This focuses particularly on the manufacturing sector. It also incentivizes youth joining the workforce for the first time. An important outcome of the Scheme will be the formalization of the country’s workforce. This will happen by extending social security coverage for crores of young men and women.
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