Boosting Job Creation: Cabinet Approves (Employment Linked Incentive) ELI Scheme
On July 1st, 2025, the Union Cabinet, chaired by Prime Minister Shri Narendra Modi, approved the ELI Scheme to drive large-scale job creation, enhance employability, and provide social security across sectors, with special focus on manufacturing. Furthermore, the ELI Scheme, announced in the Union Budget 2024-25, forms part of the PM’s package of five initiatives aimed at generating employment, improving skills, and creating opportunities for 4.1 crore youth with a total budget outlay of Rs 2 Lakh Crore.
Key Takeaways from the (Employment Linked Incentive) ELI Scheme
Under the ELI Scheme, first-time employees receive one month’s wage (up to Rs 15,000/-). Additionally, employers obtain incentives for generating extra employment for two years, with extended benefits for another two years specifically in the manufacturing sector. The ELI Scheme encourages formalization of the workforce, requiring careful documentation and adherence to corporate compliance processes.
- The government plans to incentivize over 3.5 crore jobs in two years by allocating Rs. 99,446 Crore under the ELI Scheme.
- The scheme targets 1.92 crore first-time employees entering the workforce.
- The incentives apply only to jobs created between 1st August 2025 and 31st July 2027.
Who Benefits from the ELI Scheme:
- Employees
- Employer
The Scheme consists of two parts – Part A and Part B.
Part A of ELI Scheme: Incentive to First Time Employees
Under Part A of the ELI Scheme, first-time employees earning up to ₹1 Lakh per month receive one month’s wage (up to ₹15,000) in two installments after completing 6 and 12 months of service. To obtain the second installment, employees must complete a mandatory financial literacy program. This approach ensures that wage support also promotes financial awareness.
Part B: Support to Employers:
- Employers get ₹1,000 to ₹3,000 per month per additional employee, based on salary slabs up to ₹1 lakh/month.
- Incentives will continue for 2 years, and for 4 years in the manufacturing sector.
- Employers must hire at least 2 additional employees (if workforce < 50) or 5 additional employees (if workforce ≥ 50) for sustained 6-month employment.
The incentive structure will be as under:
| EPF Wage Slabs of Additional Employee | Benefit to the Employer (per additional employment per month) |
| Up to INR 10,000 | Upto INR 1,000 |
| More than INR 10,000 and up to INR 20,000 | INR 2,000 |
| More than INR 20,000 (upto salary of INR 1 Lakh/ month) | INR 3,000 |
Incentive Payment Mechanism as per the Employee Provident Fund Organization (“EPFO”):
Under Part A of the scheme, all payments to first- time employees will be disbursed through the Direct Benefit Transfer (DBT) via Aadhaar Bridge Payment System, following proper financial reporting practices. Whereas Employers incentives under Part B will be transferred to PAN-linked bank accounts.
Conclusion:
The ELI Scheme is a transformative move and aims to strengthen the economy and is expected to formalize the workforce, bringing 2.6 crore additional jobs by encouraging youth to join the formal sector for the first time. This is part of the government’s broader vision to create 4.1 crore employment and skilling opportunities for India’s youth.
Source: The official notification can be accessed at below link: