Union Cabinet Approves Employment Linked Incentive Scheme To Boost Jobs

The Union Cabinet has approved the Employment Linked Incentive (ELI) Scheme, a comprehensive new initiative designed to support job creation, boost employability, and extend social security benefits across various sectors, with a particular focus on manufacturing.

This landmark scheme was announced in the Union Budget 2024-25 and is expected to generate more than 35 million jobs between August 2025 and July 2027.

According to a statement from the Union Cabinet, the scheme aims to encourage the formalisation of India’s workforce by targeting nearly 19 million individuals entering the formal job market for the first time.

New employees under the scheme will receive incentives equivalent to up to one month’s Employees’ Provident Fund (EPF) wage, capped at ₹15,000.

The government will disburse these payments in two instalments: the first after six months of continuous employment, and the second after twelve months of service along with completion of a financial literacy programme.

Incentives for employers

The ELI Scheme also provides substantial benefits for employers who create new jobs.

Businesses hiring additional staff will be eligible for incentives for up to two years, with manufacturing sector employers receiving benefits extended to four years.

To qualify, companies with fewer than 50 employees must hire at least two new workers, while those with 50 or more staff must add at least five.

These new hires must remain employed for a minimum of six months.

Employers will receive monthly incentives ranging from ₹1,000 to ₹3,000 per additional employee, depending on the worker’s EPF wage.

Meanwhile, The government anticipates that this component of the scheme alone will contribute to the creation of approximately 26 million jobs.

The government emphasised that a significant outcome of the ELI Scheme will be the formalisation of India’s labour market, bringing millions of workers into the fold of social security coverage.

This expansion is expected to benefit crores of young men and women by offering greater job stability and access to provident fund benefits.

Financial outlay and long-term impact

The total projected spending for the ELI Scheme is ₹99,446 crore, signalling a major investment in India’s employment landscape.

The scheme is part of the government’s broader economic strategy to strengthen the manufacturing sector, promote formal employment, and provide social security to a growing workforce.

The Employment Linked Incentive Scheme represents a strategic step towards creating a robust and inclusive job market in India.

By incentivising both workers and employers, the initiative aims to foster sustainable employment growth, particularly in manufacturing, while simultaneously improving social security coverage and worker welfare.

This bold move aligns with the government’s vision of a formal, skilled, and secure workforce capable of supporting India’s economic growth in the years ahead.