Govt Approves ₹1 Lakh Crore Employment Linked Incentive Scheme to Generate 3.5 Crore Jobs by 2027
New Delhi, July 1 – In a landmark decision to address unemployment and accelerate economic recovery, the Union Cabinet, chaired by Prime Minister Narendra Modi, on Tuesday approved the much-anticipated Employment Linked Incentive (ELI) Scheme. With a total outlay of ₹99,446 crore, the scheme is designed to generate 3.5 crore additional jobs across the country over the next two years.
The ELI Scheme, which was first announced in the Union Budget 2024–25, is part of the government’s broader commitment to supporting India’s youth workforce, promoting manufacturing, and enhancing social security coverage. It forms one of the five key initiatives under the Prime Minister’s employment and skill development package, aimed at reaching 4.1 crore young Indians with a total budget of ₹2 lakh crore.
Key Objectives of the ELI Scheme
The ELI Scheme is structured to:
- Create over 3.5 crore new jobs by July 2027
- Encourage employers to hire and retain employees
- Support first-time workers, particularly those entering the formal economy
- Boost the manufacturing sector, which holds strong potential for employment growth
- Strengthen the EPFO (Employees' Provident Fund Organisation)-linked formal employment network
- Promote financial literacy and savings habits among young workers
Dual Focus: Incentives for Employees and Employers
The scheme consists of two core components – Part A and Part B – each targeting a specific segment of the employment ecosystem.
Part A: Support for First-Time Employees
Designed to benefit 1.92 crore first-time employees, Part A offers financial incentives directly to workers entering the formal economy.
- Eligibility: Employees with monthly salaries up to ₹1 lakh
- Incentive: One month’s EPF wage (up to ₹15,000), paid in two instalments
- First instalment: after 6 months of sustained employment
- Second instalment : after 12 months, along with completion of a financial literacy program
- Savings Component: A portion of the benefit will be deposited in a savings instrument or fixed account to promote long-term financial discipline
- Disbursal: Through Direct Benefit Transfer (DBT) using the Aadhaar Bridge Payment System
This component is designed not just to support income generation, but also to incentivize long-term employment, financial planning, and workforce formalization.
Part B: Incentives for Employers Creating Jobs
Part B targets employers and aims to incentivize new job creation, particularly in the manufacturing sector.
- Applicable Sectors: All sectors are eligible, with extra benefits for manufacturing
Eligibility:
- Employers with fewer than 50 employees must hire at least two new workers
- Employers with 50 or more must hire at least five new employees, all retained for a minimum of six months
- Up to ₹10,000/month → ₹1,000 incentive per employee/month
- ₹10,001 to ₹20,000/month → ₹2,000 incentive per employee/month
- ₹20,001 to ₹1 lakh/month → ₹3,000 incentive per employee/month
- Two years of incentives for all sectors
- Extended to four years for jobs created in the manufacturing sector
- Payment Mechanism: Credited directly to the employer’s PAN-linked account
This part is expected to generate an additional 2.60 crore jobs and revive hiring trends in India’s employment-intensive sectors.
Eligibility Timeline and Scope
- Jobs must be created between: August 1, 2025 – July 31, 2027
- The EPFO registration of establishments is mandatory to participate in the scheme
- Employers and employees must comply with all labour law requirements
This strategic rollout timeline gives employers and state governments ample preparation time to adapt and enroll in the scheme effectively.
Why It Matters: Addressing India’s Employment Challenge
India’s labour market has faced significant strain post-COVID-19, with millions struggling to regain formal sector jobs. While job creation in sectors like IT and services has seen recovery, manufacturing and construction remain under pressure.
The ELI Scheme directly addresses:
- High youth unemployment
- Lack of incentives for formal job creation
- Informality in workforce participation
- Limited social security penetration
With 1.92 crore first-time employees expected to be formalized, the scheme will help expand EPFO coverage, enabling workers to access pension, health insurance, and retirement savings.
Expert Opinion: A Game-Changer for Formal Job Growth
Economists and labour policy experts have welcomed the ELI Scheme as a “well-structured and timely intervention.”
“This scheme addresses two of the biggest gaps in our labour market—lack of formalization and low participation in social security. If implemented effectively, it can be a game-changer for workforce development,” said Dr. Nivedita Sharma, a labour economist at Delhi University.
Manufacturing Sector in Focus
With Make in India 2.0 and the government’s broader push to become a global manufacturing hub, the ELI Scheme’s extended benefits for manufacturing employers are seen as a crucial driver of:
- Factory-level job growth
- Upskilling of rural and semi-urban youth
- Infrastructure and industrial ecosystem development
Manufacturing has the highest potential for mass employment, and the government’s long-term goal is to raise its contribution to GDP to 25%, up from the current 17–18%.
How This Scheme Complements Other Government Programs
The ELI Scheme is part of the ₹2 lakh crore Employment Package announced in Budget 2024, which also includes:
- Skill Development Initiatives
- MSME Employment Boost Schemes
- Digital Skilling and Apprenticeship Programs
- Women Workforce Participation Programs
Together, these aim to transform India’s employment landscape, with the ELI Scheme being the flagship initiative.
The Road Ahead: Implementation and Monitoring
- The government plans to establish a centralised digital dashboard for tracking scheme performance
- Third-party audits and data analytics will ensure transparency and outcome-based evaluation
- Awareness campaigns, workshops, and state-level partnerships will be conducted to onboard small and medium employers
The Labour Ministry, in coordination with EPFO, will spearhead the rollout, backed by state labour departments, to ensure grassroots-level effectiveness.
Reader Takeaway: What You Should Know
- The ELI Scheme begins on August 1, 2025
- It promises incentives for new employees and employers
- It targets 3.5 crore new jobs by July 2027
- Special focus is given to first-time workers and manufacturing employers
- Benefits are transferred via DBT and PAN-linked accounts
- The initiative is expected to boost formal employment, support economic recovery, and improve social security inclusion