Employment Linked Incentive (ELI) Scheme – Full Details

Employment Linked Incentive (ELI) Scheme is a major initiative launched by the Government of India to boost job creation, improve employability and extend social security across all sectors, with special emphasis on manufacturing. (Prime Minister’s Office India) The scheme is designed to support both first-time employees entering the formal workforce and employers who generate additional employment beyond their previous baseline.

Contents

WhatsApp Group Join Now

1 Employment Linked Incentive (ELI) Scheme – Full Details

Employment Linked Incentive (ELI) Scheme – Full Details

Launch & Duration:

The ELI scheme was announced as part of the Union Budget 2024-25.
The Cabinet approved it on 1 July 2025.
It applies to new jobs created from 1 August 2025 to 31 July 2027. For the manufacturing sector, certain extended incentives apply until 31 July 2029.

Objectives

Generate more than 3.5 crore (35 million) new formal jobs over a period of two years.
Benefit approximately 1.92 crore first-time formal workforce entrants.
Encourage employers across all sectors (especially manufacturing) to increase their workforce and formalise employment.
Key Features / Scheme Structure

The scheme has two main parts:

Telegram Group Join Now

Part A – Incentives for First-Time Employees

Targets individuals entering formal employment (registered with the Employees’ Provident Fund Organisation (EPFO) for the first time) and drawing a salary up to ₹1 lakh per month.
Such employees will receive an incentive equivalent to one month’s wage (up to ₹15,000), paid in two installments:
First installment after 6 months of continuous employment.
Second after 12 months of service and completion of a financial-literacy programme.
A portion of the incentive may be kept in a savings instrument to encourage long-term savings.

Part B – Incentives for Employers

Employers registered with EPFO who create additional net employment (above their baseline) for employees earning up to ₹1 lakh per month are eligible.
Incentive amounts are up to ₹3,000 per month per additional employee for two years; for manufacturing firms, incentives can extend into years 3 and 4.
Eligibility conditions include for smaller employers (<50 employees) at least 2 additional hires; for larger employers (≥50) at least 5 additional hires sustained for at least six months.

Eligibility Criteria

Employees: Must be first-time formal employer register-ee with EPFO; salary ≤ ₹1 lakh/month; UAN, Aadhaar & bank account linkage as per EPFO norms.
Employers: Must be EPFO-registered establishments; must create additional employment beyond the previous year’s baseline; hiring must be sustained for minimum period (6 months) and follow EPFO compliance.

Benefits

For first‐time employees: Up to ₹15,000 incentive (in two parts) which helps boost formal employment uptake and social security coverage.
For employers: Monthly financial support (up to ₹3,000 per additional employee) incentivises firms to hire and formalise labour, especially in manufacturing.
Larger national benefit: Formalisation of workforce, job creation at scale (35 million jobs targeted), and strengthening of social security systems.

Implementation & Monitoring

The scheme is expected to be implemented primarily via EPFO’s digital platforms (for registration, claim filing, verification) and benefits will be paid via Direct Benefit Transfer (DBT) or linked bank accounts.
Employers and employees must maintain records and compliance (for example, filing Electronic Challan cum Return (ECR) accurately) in order to avail benefits.

Significance

This scheme represents a large and ambitious push by the Indian government to formalise employment, especially for youth entering the labour market for the first time, while simultaneously supporting employers to increase hiring. It aligns with broader goals of industrial growth, social security coverage extension, and boosting manufacturing in India. Visit Now