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Employment Linked Incentive Scheme 2025: Union Cabinet approves ₹99,446 crore ELI Scheme to create 3.5 crore formal jobs with EPFO-linked benefits and incentives for both employees and employers.

Cabinet Approves ELI Scheme to Generate 3.5 Crore Jobs Across India

A Bold Initiative for Youth and Economy

On July 1, 2025, the Union Cabinet approved the Employment Linked Incentive (ELI) Scheme with a financial outlay of approximately ₹99,446 crore (~US $11.7 billion). The goal: create over 3.5 crore (35 million) formal jobs from August 1, 2025, to July 31, 2027

Objective and Target Audience

This two-part initiative aims to:

Encourage first-time job seekers to enter the workforce.
Support employers—particularly in manufacturing—to expand their workforce

Part A: Support for First-Time Employees

Covers around 1.92 crore young job entrants registered with the Employees’ Provident Fund Organisation (EPFO)
Eligible employees (earning up to ₹1 lakh/month) will receive a one-month EPF-equivalent wage, up to ₹15,000, in two installments:
1. After 6 months of sustained employment;
2. After 12 months, upon completion of a financial literacy training
A part of the incentive is locked in a savings instrument to promote financial discipline

Part B: Incentives for Employers

Employers registered with EPFO get monthly incentives of up to ₹3,000 per new employee retained for at least six months
Structure:
- Salaries ≤ ₹10,000 → up to ₹1,000/month
- ₹10,001–₹20,000 → ₹2,000/month
- ₹20,001–₹1,00,000 → ₹3,000/month
Small establishments (<50 employees) must recruit at least 2 additional workers; larger firms (≥50) must hire at least 5 new employees
Enhanced benefits for manufacturing units: employer incentives extended to years 3 and 4

Payment Mechanism

Employee benefits via Direct Benefit Transfer (DBT) through the Aadhaar Bridge Payment System.
Employer incentives credited to PAN‑linked bank accounts

Strategic Outcomes

Formalises employment, increasing EPFO coverage.
Supports the Make in India and Atmanirbhar Bharat missions.
Tackles youth unemployment—even as GDP growth exceeds 8%, youth unemployment remains high (urban 17.9%, rural 13.7%)

Why This News Is Important

Tackling Youth Unemployment

India’s GDP growth (~8%) hasn’t translated to sufficient job creation. Youth unemployment—especially among 15–29-year-olds—stands at 17.9% in urban and 13.7% in rural areas . The ELI Scheme addresses this critical gap.

Promoting Formal Employment

By incentivising EPFO registration, the scheme aims to formalize jobs, providing social security benefits, stable incomes, and improved living standards.

Boosting Manufacturing Sector

Manufacturing firms receive extended incentives for voluntary hiring, aligning with “Make in India” goals and strengthening the industrial ecosystem.

Financial Literacy and Savings

Linking incentives to financial training and locked savings inculcates financial discipline among young workers.

Exam-Relevant Policy Insight

For civil services, banking, defence, teaching, and police exams, understanding economic and employment measures like ELI is essential to assess government strategy and policy efficacy.

Historical Context

Budget 2024–25 Announcement

First announced in the July 2024 Union Budget, the ELI Scheme forms part of a ₹2 lakh crore employment and skilling package supporting 4.1 crore youth

Political Milestone

Promised post the BJP’s electoral losses, the scheme enhances job creation and skill development ahead of upcoming polls

Formalisation Drive

Building on previous initiatives like MUDRA Yojana, Skill India, and PMEGP, ELI furthers India’s formal employment agenda.

Global Context

Echoing employment-linked subsidies seen in countries like Vietnam, Bangladesh, and Turkey, India steps up its efforts to make its workforce globally competitive.

Key Takeaways from “ELI Scheme Approved”

S. No.	Key Takeaway
1.	The ELI Scheme has a total budget of ₹99,446 crore, targeting the creation of 3.5 crore jobs over two years
2.	Part A incentivizes ~1.92 crore first-time EPFO-registered employees with up to ₹15,000, disbursed in two installments .
3.	Part B offers employer incentives of ₹1,000 to ₹3,000/month per additional employee, based on salary slab .
4.	The scheme promotes formal employment, financial literacy, and savings by linking incentives to EPFO registration and financial training .
5.	Applicable to jobs created between 1 Aug 2025 and 31 Jul 2027, with extra incentives for manufacturing firms sustaining hires into years 3 and 4 .

employment linked incentive scheme

FAQs: Frequently Asked Questions

1. What is the ELI Scheme?

The Employment Linked Incentive (ELI) Scheme is a government initiative approved by the Union Cabinet to create over 3.5 crore formal jobs in India between August 2025 and July 2027.

2. What is the total financial outlay of the ELI Scheme?

The scheme has a budgetary outlay of ₹99,446 crore, making it one of the largest employment support programs in India’s history.

3. Who are the beneficiaries under Part A of the scheme?

First-time job seekers registered with the EPFO, earning up to ₹1 lakh/month, are eligible. They will receive a maximum benefit of ₹15,000 in two installments.

4. How does Part B of the scheme benefit employers?

Employers receive monthly incentives ranging from ₹1,000 to ₹3,000 per newly hired employee, based on the salary bracket, provided the employee remains employed for at least 6 months.

5. How will the payments be made under this scheme?

Employees will receive incentives via Direct Benefit Transfer (DBT) linked to Aadhaar, and employers will receive funds in their PAN-linked bank accounts.

6. What is the duration of the scheme’s implementation?

The scheme will run from 1st August 2025 to 31st July 2027, with additional employer incentives extended to years 3 and 4 for manufacturing firms.