Centre's New ELI Scheme To Boost, Sustain Jobs & Employability

The scheme assures one month’s wage to first-time employees, while incentivising employers for two years. For the manufacturing sector, these incentives are extended for two more years

ELI Scheme, PM Modi, Jobs

Earlier this week, the Union Cabinet, chaired by Prime Minister Narendra Modi, ratified the government's new Employment Linked Incentive (ELI) scheme — aimed at supporting employment generation, enhancing employability and social security across all sectors, with a special focus on the manufacturing sector — involving an outlay of Rs 99,446 crore.

The government believes this innovative measure will boost and sustain employment in the country, much like its earlier Production Linked Incentive (PLI) scheme.

The scheme has been envisaged in two parts. In the first segment, first-time employees will get one month’s wages (up to Rs 15,000). In the second segment, employers will be given incentives for generating additional employment up to a limit of two years, with the benefits extended for another two years to the manufacturing sector. 

The government said in a statement, the ELI scheme was announced in the Union Budget 2024-25 as part of the PM’s package of five schemes to facilitate employment, upskilling, and other opportunities for 4.1 crore youth, with a total budget outlay of Rs 2 lakh crore.

Using the outlay for the next two years, it aims to incentivise the creation of more than 3.5 crore jobs in the country, of which 1.92 crore beneficiaries will be among those entering the job market for the first time, for jobs created between August 1, 2025 and July 31, 2027. 

Part A: First-Time Employees

Part A targets first-time employees who register with the EPFO. It will offer a one-month EPF wage of up to Rs 15,000, in two instalments. Employees with salaries up to Rs 1 lakh per annum will be eligible.

The first instalment will be payable after an employee remains in service for 6 months, the second after 12 months of service.

To encourage a habit of saving, a portion of the incentive will be deposited in a savings account for a fixed period, and can only be withdrawn by the employee at a later date. 

Part B: Support For Employers

Part B aims to generate additional employment in all sectors, with a special focus on manufacturing. Under it, employers will be given incentives for hiring employees with salaries up to Rs 1 lakh pa.

The government will incentivise these employers for two years, with up to Rs 3,000 per month for each additional hiring with sustained employment for at least six months. For the manufacturing sector, this incentive will be extended to the third and fourth years as well.

Establishments with less than 50 employees that are registered with the EPFO, have to hire at least two additional employees on a sustained basis for at least six months. In case of firms with 50+ employees, the number of additional employees needed is five.

How ELI Will Be Implemented

According to an official, an important outcome of the scheme is to ensure that the country’s workforce gets formalised, by extending social security coverage for crores of young men and women. 

Noting that soon the Centre will form a “perfect mechanism” to implement the ELI scheme, Union Labour Minister Mansukh Mandaviya, while talking to the press, said the new mechanism would function on the basis of payroll additions in the EPFO. He said all employers enrolled under EPFO would be eligible for the scheme.

He added that the Centre will tweak the scheme based on the experience of the employment sustainability scheme that was implemented during the Covid-19 pandemic period, beginning 2020. 

Social Security Net

Mandaviya said the Centre’s efforts to widen the social security net had paid off, with the International Labour Organisation (ILO) having acknowledged that over 90 crore Indians now have one or the other social security.

He added that the government was trying to sign social security agreements with other countries, so that Indians working abroad could also avail of social security schemes applicable to them in India. 

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