Driving Jobs and Social Security Across Sectors
The Union Cabinet, chaired by Hon’ble Prime Minister Shri Narendra Modi, has approved the Employment Linked Incentive (ELI) Scheme, designed to promote employment generation, enhance employability, and extend social security across all sectors, with a special focus on the manufacturing sector.
This Scheme is part of the Prime Minister’s Employment and Skilling Package, announced in the Union Budget 2024-25, which includes five schemes to facilitate employment, skilling, and livelihood opportunities for the country’s youth. The total package has an outlay of ₹ 2 Lakh Crore, with the ELI Scheme specifically allocated ₹ 99,446 Crore.
OBJECTIVE OF THE SCHEME:
The ELI Scheme aims to:
• Incentivize the creation of over 3.5 crore new jobs in the country over a period of two years.
• Support approximately 1.92 crore first-time employees entering the workforce.
• Encourage formalization of jobs and extend EPFO-based social security coverage.
• Drive employment growth, especially in the manufacturing sector.
COVERAGE PERIOD:
The Scheme is applicable to jobs created between: 1st August 2025 to 31st July 2027.
WHO CAN APPLY TO AVAIL THE BENEFITS:
For First-Time Employees (Part A)
• Individuals who:
o Are joining the workforce for the first time and are registered with the Employees’ Provident Fund Organisation (EPFO).
o Have a monthly salary up to ₹ 1,00,000.
o Maintain continuous employment with the same employer for at least 6 months to receive the first installment of the incentive.
o Complete 12 months of service and a Financial Literacy Programme to receive the second installment.
• The incentive is also designed to promote savings, with part of the benefit placed in a savings instrument or deposit account, withdrawable after a fixed period.
For Employers (Part B)
• Eligible Employers:
➢ Must be registered with the Employees’ Provident Fund Organisation (EPFO).
➢ Should generate additional employment, defined as:
▪ Hiring at least 2 additional employees, if the establishment has fewer than 50 employees.
▪ Hiring at least 5 additional employees, if the establishment has 50 or more employees.
➢ Newly hired employees should:
▪ Have a monthly salary up to ₹ 1,00,000.
▪ Remain in sustained employment for a minimum of 6 months.
SPECIAL PROVISION FOR MANUFACTURING SECTOR:
➢ Employers in the manufacturing sector will receive incentives for an extended period of up to 4 years, compared to 2 years for other sectors.
KEY COMPONENTS OF THE SCHEME:
Part A – Incentive to First-Time Employees
• Eligible employees can receive one month’s EPF wage, capped at ₹ 15,000, paid in two installments:
o After 6 months of continuous service.
o After 12 months of service and completion of the Financial Literacy Programme.
Part B – Incentives for Employers Generating Additional Employment
EPF Wage Slab of Additional Employee
Benefit to Employer (per employee per month)
Up to ₹ 10,000
Up to ₹ 1,000 (Proportional incentive applies)
₹ 10,001 to ₹ 20,000
₹ 2,000
₹ 20,001 to ₹ 1,00,000
₹ 3,000
Incentives are available:
• For 2 years across all sectors.
• For 4 years in the manufacturing sector.
INCENTIVE PAYMENT MECHANISM
• Payments to first-time employees under Part A will be made via Direct Benefit Transfer (DBT) using the Aadhar Bridge Payment System (ABPS).
• Payments to employers under Part B will be credited to their PAN-linked bank accounts.
EXPECTED OUTCOMES
• Large-scale job creation, especially in the manufacturing sector.
• Enhanced participation of youth in the formal workforce.
• Strengthening of social security coverage via EPFO enrolment.
• Encouragement of savings and financial literacy among young employees.
• Promotion of formal, sustained employment and industrial growth.
The Employment Linked Incentive (ELI) Scheme represents a strategic initiative to empower India’s youth, stimulate formal job creation, and develop a more secure, skilled, and productive workforce. The scheme is designed to promote large-scale employment opportunities, support employers, and accelerate the formalization of India’s workforce
One of the most significant advantages of the ELI Scheme is the opportunity it provides for individuals currently working in the unorganized sector to transition into formal, organized employment. This transition offers access to stable jobs, social security benefits, and long-term career growth.
At Bizsolindia, we understand the complexities involved in implementing government schemes and ensuring statutory compliance. We can provide complete guidance and end-to-end support to businesses in availing the benefits of the ELI Scheme, including eligibility assessments, documentation, and procedural compliance.
For further assistance or to explore how your organisation can benefit from this scheme, feel free to contact us at:
corporate@bizsolindia.com
(Source: PIB 01-07-2025)
The Union Cabinet approved the ELI Scheme on July 1, 2025, but so far no official Gazette or Notification is released or widely publicized as of now.
