Union Cabinet Approves ELI Scheme

• 02 Jul 2025
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PM Modi-led Union Cabinet has approved Employment Linked Incentives (ELI) Scheme to boost employment generation, increase employability and social security among all industries, especially in the manufacturing industry.

The Scheme will provide first-time employees with one month’s wage, which can be up to Rs 15,000. Also, the employers will receive incentives for a period to two years for generating additional employment. For the manufacturing sector, these benefits extend for another two years.

With a total budget outlay of Rs 2 Lakh Cr., the ELI Scheme was announced in the Union Budget 2024-25 as part of the PM’s package of five initiatives to assist employment, skilling and other possibilities for over 4.1 Crore youth in India.

The ELI Scheme intends to encourage the development of over 3.5 crore jobs in the nation over a two-year period with an investment of Rs 99,446 crore. Among these, 1.92 crore beneficiaries would be people who are first-time employees. The Scheme's benefits would apply to jobs produced between August 1, 2025, and July 31, 2027.

Part A & B of ELI Scheme 2025

The ELI Scheme is divided into two parts i.e., (i) Part A, which targets first-time employees, and (ii) Part B, which incentivises employers for creation of additional jobs.

Part A of ELI Scheme

Part A of the Scheme targets first-time employed individuals who are EPFO-registered. It offers one-month EPF salary, up to a maximum of Rs 15,000, in two installments.

It is important to note that only employees with up to Rs. 1 lakh salary are eligible. While the 1st installment is payable after 6 months of providing services, the 2nd installment will be payable upon completion of 12 months of service and fulfillment of financial literacy program by the employee.

To promote savings habit, a fraction of the incentive will be stored in a savings instrument of a deposit account for a fixed period. The employee can withdraw this amount on a later date. Over 1.92 crore first time employed individuals will access the benefits of Part A.

Part B of ELI Scheme

The Scheme’s B Part will focus on generating additional employment across all the sectors. It will especially focus on the manufacturing sector. The employers will receive incentives in respect of employees with up to Rs. 1 lakh as salary.

Employers will be incentivized up to Rs. 3000 per month for two years for each additional employee with sustained employment for a minimum period of 6 months. Incentives will also be offered to the third and fourth years for the manufacturing sector.

EPFO-registered establishments will have to hire at least two more workers (for businesses with less than fifty employees) or five more workers (for businesses with fifty or more employees) on a continuous basis for a minimum of six months.

Incentive Structure of Part B

The incentive structure for Part B of ELI Scheme is as follows:

Note: It is important to note that proportional incentive will be received by employees with EPF wages up to Rs. 10,000. 

B Part is anticipated to incentivize employers for generating additional employment of approximately 2.60 Cr. individuals.

How will ELI Incentives be Paid?

Under A Part of the Scheme, all the payments shall be made to first time employees via DBT (Direct Benefit Transfer) mode with the help of Aadhar Bridge Payment System (ABPS). As far as B Part of the Scheme is concerned, the payments will be made directly to employers into their PAN-linked accounts. 

The Government of India, through the ELI Scheme, aims to propel job creations across all the industries. It incentivises youth joining the workforce for the first time in their lives. The Scheme will formalize the workplace of India by extending social security benefits for crores of young men as well as women.

Source: PIB