What Is Employment Linked Incentive Scheme, Approved By Modi Govt?

The union cabinet has approved the Employment Linked Incentive (ELI) Scheme, structured in two parts on Tuesday, July 1, 2025.

With an outlay of around Rs 1 lakh crore, the scheme aims to generate over 3.5 crore employment opportunities for our Yuva-Shakti.

Under the first part of this scheme, the first-time employees registered with EPFO (Employees' Provident Fund Organisation) will receive one-month EPF wage up to Rs 15,000 in two installments. The employees to be considered should have a salary up to Rs 1 lakh.

Under Part B, employers to get incentive up to Rs 3,000/month for two years for each additional job creation across sectors. For the manufacturing sector, incentives will be extended to the third & fourth year.

Let's take deep dive into understanding how goes the broad-based ELI will play a pivotal role in generating new employment opputunities.

ELI Scheme Incentive To First Time Employees

Targeting first-time employees registered with EPFO, this Part will offer one-month EPF wage up to Rs 15,000 in two installments. The employees eligible should be under a salary bracket not exceeding Rs 1 lakh.  The first installment will be payable after 6 months of service and the second installment will be payable after 12 months of service and completion of a financial literacy programme by the employee. To build the habit of saving, a part of the allocated incentive will be kept in a savings instrument of deposit account for a fixed period which can be withdrawn by the employee at a later date.

Around 1.92 crore first time employees stand to benefit from ELI scheme's implementation.

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How Does This Modi-Backed ELI-Scheme Benefit Employers?

This part will cover generation of additional employment in all sectors, with a special focus on the manufacturing sector.  The employers will get incentives in respect of employees with salaries up to Rs 1 lakh.  The Government will incentivize employers, up to Rs 3000 per month, for two years, for each additional employee with sustained employment for at least six months.  

For the manufacturing vertical, incentives will be extended to the third and fourth years as well.

Further, establishments registered with EPFO will be required to hire at least two additional employees (for employers with less than 50 employees) or five additional employees (for employers with 50 or more employees), on a sustained basis for at least six months.

This part is expected to buoy employers to create an additional employment of nearly 2.60 crore personnel.