Cabinet Approves Employment Linked Incentive (ELI) Scheme to create 3.5 cr jobs

In a landmark employment-centred reform, the Union Cabinet headed by Prime Minister Narendra Modi has approved the almost ₹ 1 lakh crore  Employment Linked Incentive (ELI) Scheme, which aims to create more than 3.5 crore jobs across sectors, especially in manufacturing.  The ELI Scheme aims to encourage new employment on the first-time employee level and on employers, support new job creation and better social security without the risks; to Indias young workforce.

Why in News?

The ELI Scheme was announced during the Union Budget 2024-25 and approved by the Cabinet on July 1, 2025.  The ELI Scheme will be know as package or plan part of a wider employment and skilling related package, a sum of ₹ 2 lakh crore worth of employment initiative designed to address the challenges of unemployment, formalisation of employment, and accessment of new employability for youth, mostly in a whole new post-pandemic world!  The planned job creation from this program is from August 1, 2025 to July 31, 2027.

Aim & Objectives

• Formal job creation of 3.5 crores in over 2 years.

• Encouraging every type employment, especially, manufacturing.

• Create value for first-time employees and employers.

• Create more social security registered relatives through EPFO.

• Improvement of youth in finilal literacy and savings culture.

Structure of the ELI Scheme

Part A- Incentives to First-Time Employees

• Beneficiaries: 1.92 crore new workers registered with EPFO.
• Benefit: One-month wage up to ₹15,000 in two parts:
• First part after 6 months of service.
• Second part after 12 months of service + completion of financial literacy training.
• Eligibility: Salary up to ₹1 lakh/month.
• Percentage of incentive will be locked into savings instruments and leave the balance for future who withdraw.

Part B- Assistance to Employers

• All sectors covered but with extra benefits for manufacturing.
• Incentives to employers who hire additional employees and with sustained employment of 6 months.
• Available only for employers registered with EPFO.

Minimum new hires are as follows:

• 2 employees for (<50 employee) firms
• 5 employees for (≥50 employee) firms

Employer Incentives,

• Employee’s EPF Wage Slab Employers Incentive/Month
• Up to ₹10,000 Up to ₹1,000
• ₹10,001 – ₹20,000 ₹2,000
• ₹20,001 – ₹1,00,000 ₹3,000
• Incentives for employers and extended employment period in the 3rd and 4th years for employees in manufacturing.

Payment Mechanism

• Part A: Payments via DBT through Aadhar Bridge Payment System.
• Part B: Payments made into employers PAN linked accounts.