The Union Cabinet led by Prime Minister Narendra Modi has given the green light to the Employment Linked Incentive (ELI) Scheme, aiming to create more than 3.5 crore jobs, especially in the manufacturing sector. With an allocation of about ₹1 lakh crore, this initiative focuses on kickstarting employment for first-time job seekers, assisting employers in job creation, and providing social security benefits to India’s young workforce.
Why the ELI Scheme Matters
The ELI Scheme, a part of the ₹2 lakh crore employment and skilling package announced in the Union Budget 2024–25, has been approved by the Cabinet on July 1, 2025. It is a strategic move to combat unemployment challenges, foster formal job opportunities, and enhance the employability of the youth, especially in the aftermath of the pandemic. The scheme is set to drive job creation from August 1, 2025, to July 31, 2027.
Aim & Objectives
- Create over 3.5 crore formal jobs in 2 years.
- Promote employment in manufacturing and other sectors.
- Support first-time employees and incentivize employers.
- Strengthen social security coverage through EPFO registration.
- Enhance financial literacy and promote savings culture among youth.
Structure of the ELI Scheme
Part A – Incentives to First-Time Employees
- Beneficiaries: 1.92 crore new employees registered with EPFO.
- Benefit: One-month wage up to ₹15,000 in two installments.
- Eligibility: Salary up to ₹1 lakh/month.
Part B – Support to Employers
- Covers all sectors; special benefits for manufacturing.
- Incentives to employers for hiring additional employees.
Minimum New Hires Required
- 2 employees (firms with <50 employees)
- 5 employees (firms with ≥50 employees)
Incentive Structure for Employers
- Employee’s EPF Wage Slab Employer Incentive/Month
- Up to ₹10,000 Up to ₹1,000
- ₹10,001 – ₹20,000 ₹2,000
- ₹20,001 – ₹1,00,000 ₹3,000
Significance of the Scheme
- Catalyzes job creation post-COVID-19, especially for youth and first-time entrants.
- Encourages formal employment and EPFO registration.
- Boosts the manufacturing sector and aligns with ‘Make in India’ vision.
- Enhances employer accountability while promoting a financially aware workforce.
- Supports social and economic mobility for crores of Indians.
Key Takeaways for Competitive Exams
The ELI Scheme approved by the Cabinet aims to create 3.5 crore jobs in various sectors, with a focus on manufacturing. It supports first-time employees with financial incentives and aims to enhance financial literacy among the youth. This initiative is crucial for boosting employment post-COVID-19 and aligning with the Make in India vision.
