New Delhi- In a significant push to stimulate employment and strengthen social security in the country, the Union Cabinet led by Prime Minister Narendra Modi has approved the Employment Linked Incentive (ELI) Scheme. Designed to benefit both job-seekers and employers, the scheme promises to generate over 3.5 crore jobs within the next two years with a total outlay of nearly Rs1 lakh crore. Special emphasis has been placed on incentivizing the manufacturing sector and supporting first-time workers entering the formal workforce.
Announced as a key component of the Union Budget 2024–25 under the Prime Minister’s employment-focused initiatives, the ELI Scheme is part of a broader Rs2 lakh crore package targeting employment, skilling, and entrepreneurship opportunities for over 4 crore youth. The scheme officially covers job creation between August 1, 2025, and July 31, 2027.
The policy operates on a dual model: one targeting first-time employees and the other incentivizing employers who generate sustained additional employment. First-time employees who join the workforce and are registered with the Employees’ Provident Fund Organisation (EPFO) will receive one month’s wage, up to Rs15,000, in two installments. The first installment will be released after six months of employment, and the second after one year, provided the beneficiary also completes a financial literacy program. Part of this incentive will be held in a savings instrument to encourage long-term financial discipline among young workers.
For employers, the government will offer financial incentives of up to Rs3,000 per month for each new employee retained for at least six months. These incentives will continue for two years across all sectors, and for up to four years in the manufacturing sector. The scheme is open to all establishments registered under EPFO, provided they hire at least two new employees if the company has fewer than 50 workers, or five if the establishment has 50 or more.
The employer incentives are structured based on the wage bracket of the newly hired employee, with higher benefits provided for higher salary levels, up to a maximum salary cap of Rs1 lakh per month. These payments will be directly deposited into the employer’s PAN-linked bank accounts, while employees will receive theirs through the Aadhaar-linked Direct Benefit Transfer system.
A total of 1.92 crore first-time employees are expected to benefit under the employee-focused component, while employers are expected to generate around 2.6 crore additional jobs through sustained hiring. The government sees this scheme not only as a major employment booster but also as a step toward formalizing the labour force and ensuring greater social security coverage for India’s youth.
With its launch, the ELI Scheme sets the stage for a new era of employment generation, particularly in sectors that have high potential for growth and labor absorption. It reflects the government’s commitment to fostering a more inclusive, secure, and opportunity-rich labour market across India.
