In a boost to employment generation, the Union Cabinet, chaired by Prime Minister Narendra Modi, has outlaid Rs1 lakh crore to facilitate employment, skilling, and other opportunities for youth in India under the Employment Linked Incentive (ELI) Scheme, with special focus on the manufacturing sector. 

The ELI Scheme was announced in the Union Budget 2024-25 as part of the PM’s package of five schemes to facilitate employment, skilling, and other opportunities for youth.

The ELI Scheme aims to incentivise the creation of more than 3.5 crore jobs in the country, over 2 years. Out of these, 1.92 crore beneficiaries will be first timers, entering the workforce. The benefits of the Scheme would apply to jobs created between August 1, 2025 and July 31, 2027.

The Scheme consists of two parts with Part A focused on first timers and Part B focused on employers:

Incentive to First Time Employees

Targeting first-time employees registered with EPFO, this Part will offer one-month EPF wage up to Rs 15,000 in two installments. Employees with salaries up to Rs 1 lakh will be eligible. The first installment will be payable after 6 months of service, and the econd installment will be payable after 12 months of service and completion of a financial literacy programme by the employee. 

To encourage the habit of saving, a portion of the incentive will be kept in a savings instrument of deposit account for a fixed period and can be withdrawn by the employee at a later date. This will benefit around 1.92 crore first-time employees.

Support to Employers

This part will cover generation of additional employment in all sectors, with a special focus on the manufacturing sector. The employers will get incentives with respect of employees with salaries up to Rs 1 lakh. The Government will incentivize employers, up to Rs 3000 per month, for two years, for each additional employee with sustained employment for at least six months. For the manufacturing sector, incentives will be extended to the 3rd and 4th years as well.

Establishments, which are registered with EPFO, will be required to hire at least two additional employees (for employers with less than 50 employees) or five additional employees (for employers with 50 or more employees), on a sustained basis for at least six months. 

With the ELI Scheme, the government intends to catalyse job creation in all sectors, particularly in manufacturing sector, besides incentivizing youth joining the workforce for the first time.