Cabinet approves ₹1 trillion employment-linked incentive scheme
Delhi, Jul 1, 2025
The ELI scheme aims to generate over 35 million jobs by incentivising first-time workers and employers; EPFO-linked scheme covers jobs from August 2025 to July 2027
In a bid to support employment generation, enhance employability and social security, the Union Cabinet on Tuesday approved the Employment Linked Incentive (ELI) scheme, which was announced in the Union Budget last year as part of the Prime Minister’s package to facilitate skilling and job creation in the country.
The ELI scheme aims to support employment generation of more than 35 million jobs in two years with an outlay of Rs 1 trillion. The benefits of the scheme would be applicable to jobs created between 1 August 2025 and 31 July 2027.
“The Union Cabinet has approved the ELI scheme to boost job creation, improve employability, and enhance social security across all sectors. With an outlay of around Rs 1 trillion, the scheme aims to generate over 35 million employment opportunities for our Yuva Shakti,” Labour Minister Mansukh Mandaviya posted on X.
The scheme consists of two parts, with Part A focused on first-timers and Part B focused on employers.
Under Part A, one month’s EPF wage up to Rs 15,000 in two instalments will be given to first-time employees registered with the Employees’ Provident Fund Organisation (EPFO). Employees with salaries up to Rs 1 lakh will be eligible. The first instalment will be payable after six months of service, and the second instalment 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a portion of the incentive will be kept in a savings instrument or deposit account for a fixed period and can be withdrawn by the employee at a later date. This will benefit around 19.2 million fresh beneficiaries entering the workforce,” said the Labour Ministry in a statement.
Part B will cover generation of additional employment with salaries up to Rs 1 lakh in all sectors, with a special focus on the manufacturing sector. The government will incentivise employers registered with EPFO, up to Rs 3,000 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 third and fourth years as well.
Employers with fewer than 50 employees will have to add at least two additional employees, or five additional employees in the case of establishments with 50 or more employees, to avail of benefits.
“In the Budget, three ELI schemes were announced. However, the second and third schemes had quite a lot of overlap; hence they have been condensed as Part B. All other parameters remain the same,” explained an official, requesting anonymity.
Chandrajit Banerjee, Director General, Confederation of Indian Industry (CII), said the ELI scheme opens doors for first-time job seekers, empowering them to contribute meaningfully to India’s growth story. “It also enables employers to expand their workforce and gives a decisive push to India’s labour-intensive sectors,” he said.
Puneet Gupta, Tax Partner, EY India, said the initiative marks a significant milestone in the journey towards a more robust and inclusive workforce. “The government is committed to fostering job creation, enhancing employability, and strengthening social security across all sectors. For example, an employer in the non-manufacturing sector hiring 100 additional employees could receive up to Rs 72 lakh over two years, while a manufacturing sector employer could benefit from an impressive Rs 1.44 crore over four years,” he said.
The Prime Minister Internship Scheme — another component of the package announced last year — had its first pilot run between October and December 2024. With more than 600,000 applications received, 127,000 internship opportunities were posted by 280 top companies covering 745 districts, of which over 82,000 internship offers were made to candidates.
In Round II of the internship scheme, nearly 118,000 internships have been offered so far, with participation from 327 reputed companies.
Meanwhile, in May, the Union Cabinet also approved the Rs 60,000 crore Industrial Training Institute (ITI) upgradation scheme, with a focus on 1,000 government ITIs in a hub-and-spoke arrangement with industry-aligned revamped trades. Out of the Rs 60,000 crore to be spent under the scheme, the Centre would contribute Rs 30,000 crore, states Rs 20,000 crore, and industry Rs 10,000 crore.
[The Business Standard]
