Introduction
  • The Employment Linked Incentive (ELI) Scheme was approved by the Union Cabinet on 1st July 2025.
  • The scheme aims to promote employment generation, enhance employability, and improve social security across all sectors.
  • It places special emphasis on boosting employment in the manufacturing sector.
  • The ELI Scheme is part of the Prime Minister’s package of five flagship schemes announced in the Union Budget 2024–25 to benefit India’s youth.
  • The scheme has a total financial outlay of ? 99,446 Crore.
  • It will cover jobs created between 01 August 2025 and 31 July 2027.
  • The government targets the creation of over 3.5 Crore jobs under the scheme within two years.

OBJECTIVES

  • The scheme aims to support the creation of formal employment across sectors.
  • It seeks to improve employability through financial incentives and skilling
  • One of its key objectives is to extend EPFO-linked social security coverage to a larger section of the workforce.
  • The scheme also intends to formalize the labour force and promote long-term savings among workers.
  • It aims to catalyse employment growth in the manufacturing sector, which is seen as a high-potential area for job creation.

SCHEME COMPONENTS

Part A: Incentives to First-Time Employees
  • Part A targets first-time employees who are newly registered with the Employees' Provident Fund Organisation (EPFO).
  • Employees with a monthly salary of up to ? 1 lakh are eligible to receive incentives.
  • Each eligible employee will receive an incentive equivalent to one month's wage, up to a maximum of ? 15,000, disbursed in two installments.
    • The first installment will be given after 6 months of continuous service.
    • The second installment will be paid after 12 months of service and successful completion of a financial literacy programme.
  • A portion of the incentive will be held in a savings deposit account to promote the habit of saving. This amount will be withdrawable by the employee after a specified period.
  • All payments under Part A will be made through Direct Benefit Transfer (DBT) using the Aadhar Bridge Payment System (ABPS).
  • The government expects that around 92 Crore first-time employees will benefit under this component
Part B: Support to Employers
  • Part B of the scheme provides financial incentives to employers for creating additional employment.
  • The scheme covers employers in all sectors, with extended benefits for employers in the manufacturing sector.
  • To qualify, employers must be registered with the EPFO.
  • Employers with fewer than 50 employees are required to hire at least 2 additional employees to be eligible for the scheme.
  • Employers with 50 or more employees must hire at least 5 additional employees on a sustained basis for at least 6 months.
  • The scheme provides monthly incentives based on the EPF wage of the new employee as follows:
EPF Wage Slab Incentive to Employer (per employee per month
Up to ₹10,000 Up to ₹1,000 (proportional incentive)
More than ₹10,000 and up to ₹20,000 ₹2,000
More than ₹20,000 and up to ₹1 lakh ₹3,000
  • The incentive will be paid for a period of two years for all sectors.
  • For the manufacturing sector, the incentive period will be extended to the third and fourth years as well.
  • Payments to employers will be made directly into their PAN-linked bank accounts.
  • Part B is expected to support the generation of 6 Crore additional jobs.

KEY FEATURES

  • The ELI Scheme provides direct financial benefits to first-time workers as well as employers creating new jobs.
  • It places a strong focus on the manufacturing sector, offering extended incentives to encourage job growth in this critical area.
  • The scheme aims to formalize the workforce by bringing more workers under EPFO coverage, thereby enhancing social security.
  • It incorporates elements of financial literacy and savings, contributing to the long-term financial well-being of young employees.
  • The design of the scheme is inclusive, targeting both small and large employers across sectors.

EXPECTED OUTCOMES

  • The scheme is projected to create over 3.5 Crore jobs in the country within two years.
  • It is expected to benefit 92 Crore first-time entrants into the formal workforce.
  • The ELI Scheme will help formalize employment, increasing the number of workers covered under EPFO and other social security benefits.
  • It will contribute to financial inclusion through DBT transfers and mandatory financial literacy training.
  • The manufacturing sector is likely to see significant employment growth due to the extended benefits provided under the scheme.