Union Cabinet Approved Employment Linked Incentive Scheme with 3.5 Crore Jobs in Focus

The Union Cabinet has approved the Employment Linked Incentive (ELI) Scheme aimed at catalysing mass employment generation, especially in the manufacturing sector. 

With a significant outlay of ₹99,446 crore, this initiative intends to formalise the workforce and enhance employability by incentivising both first-time employees and employers across sectors.

Key Highlights of the ELI Scheme

The ELI Scheme is structured with 2 focus areas: one supporting first-time employees and another incentivising employers hiring additional workforce. It aims to create more than 3.5 crore jobs from August 1, 2025 to July 31, 2027. 

For new entrants into the formal workforce, one month's EPF wage up to ₹15,000 will be provided in 2 parts. Employers will receive monthly benefits of up to ₹3,000 per hire for up to 4 years in manufacturing sectors.

Part A: Support for First-Time Employees

Approximately 1.92 crore first-time workers will benefit from direct assistance under Part A of the scheme. Those drawing monthly salaries up to ₹1 lakh and registered with EPFO are eligible. The incentive of up to ₹15,000 is paid in 2 instalments: one after 6 months of continuous employment and the second after completing 12 months and attending a financial literacy programme. A portion of this incentive will be locked in a savings deposit to cultivate long-term financial habits.

Part B: Incentives for Employers to Generate More Jobs

Part B of the scheme targets employers, especially in the manufacturing sector. Companies registered with EPFO must hire a minimum of 2 additional employees (if the total staff is under 50) or 5 (if 50 or more). Employers will receive monthly incentives based on the EPF wage slabs:

• Up to ₹10,000: ₹1,000
• ₹10,001 to ₹20,000: ₹2,000
• ₹20,001 to ₹1 lakh: ₹3,000

These payments are offered for 2 years across all sectors and extended up to 4 years for manufacturing units.

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Payment Disbursal and Digital Integration

Incentives for employees will flow through the Direct Benefit Transfer system (DBT) via Aadhar Bridge Payment System (ABPS). Employer incentives will be credited directly to their PAN-linked business accounts. This ensures transparency and efficiency in disbursement while promoting digital financial inclusion.

Job Formalisation and Economic Impact

The ELI Scheme is expected to not just enhance employment opportunities but also drive formalisation by bringing millions of workers under the social security net. The scheme’s special encouragement to manufacturing can potentially catalyse industrial growth and long-term job stability.

Conclusion

The Employment Linked Incentive (ELI) Scheme represents a strategic step toward structured job creation and workforce formalisation in India. By supporting both new employees and job-generating companies, especially in manufacturing, the scheme aims to build a sustainable foundation for economic expansion and social security coverage.

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