Cabinet Clears Rs.1 Lakh Crore Employment Linked Incentive Scheme to Spur Job Growth

In a decisive policy push to accelerate job creation, the Union Cabinet on July 1, 2025, approved the Employment Linked Incentive (ELI) Scheme with a massive outlay of ₹99,446 crore. The scheme, designed to create over 3.5 crore jobs in two years, is part of the broader ₹2 lakh crore package announced in Budget 2024–25 to support youth employment and skilling. Addressing the press, Information and Broadcasting Minister Ashwini Vaishnaw confirmed that the initiative will support job generation across sectors, with a focused boost to manufacturing. The ELI scheme will begin implementation from August 1, 2025, and continue until July 31, 2027, offering structured support to both new entrants and employers.

Highlights

• Union Cabinet approves ₹99,446 crore ELI Scheme to generate 3.5 crore jobs.

• Benefits applicable for jobs created from August 2025 to July 2027.

• Special focus on boosting employment in India’s manufacturing sector.

• Announced as part of PM’s ₹2 lakh crore youth employment and skilling package.

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Financial Incentives for First-Time Workers Under EPFO Registration

The ELI scheme features a strong emphasis on integrating new entrants into the formal economy through its Part A component. First-time employees earning up to ₹1 lakh per month and registered under EPFO will receive one month’s wage (capped at ₹15,000), disbursed in two phases. The first payment will be made after six months of continuous employment, while the second will follow completion of 12 months and a mandatory financial literacy programme. A portion of this incentive will be locked in a fixed deposit to promote long-term savings. This structure is aimed at not only incentivizing sustained employment but also enhancing financial discipline among new workers. An estimated 1.92 crore first-time employees are expected to benefit under this component alone.

Highlights

• First-time EPFO-registered employees to receive wage incentive up to ₹15,000.

• Payout split into two installments, after 6 and 12 months of service.

• Financial literacy programme mandatory for second installment.

• Funds partially deposited in savings account to encourage long-term saving.

Incentives for Employers to Create Sustainable Jobs, Especially in Manufacturing

Under Part B of the ELI Scheme, employers across all sectors will receive up to ₹3,000 per month for each new job created and sustained for at least six months. These incentives apply to employees earning up to ₹1 lakh. For units with fewer than 50 employees, at least two new hires are required to avail benefits; larger firms must hire a minimum of five. Manufacturing units will get extended support for a third and fourth year, recognizing the sector’s potential to drive durable job creation. The policy also encourages formalisation, as only EPFO-registered establishments are eligible, thereby promoting structured employment practices.

Highlights

• Employers to get ₹3,000/month per new hire for 2 years; extended to 4 years for manufacturing.

• Firms must hire minimum 2 (small) or 5 (large) additional employees to qualify.

• Only EPFO-registered establishments eligible for scheme benefits.

• Focused incentives for manufacturing signal long-term industrial policy alignment.