The Union Cabinet on Tuesday has approved an employment linked incentive scheme with a budget outlay of nearly Rs 1 lakh crore, as per a government release.
The scheme aims to create over 3.5 crore new jobs over the next two years, with a strong emphasis on the manufacturing sector and first-time workers.
Announced as part of the Union Budget 2025 under the prime minister's five-scheme package targeting 4.1 crore youth, the ELI scheme is designed to enhance job creation, employability and social security across sectors. The scheme will apply to jobs created between Aug. 1, 2025, and July 31, 2027.
"The focus on manufacturing and incentives for first-time employees will greatly benefit our youth," tweeted Prime Minister Narendra Modi in support of the scheme.
The Employment Linked Incentive (ELI) Scheme cleared by Cabinet will boost job creation. The focus on manufacturing and incentives for first-time employees will greatly benefit our youth. https://t.co/Pt560ZD3VL
July 1, 2025"By incentivising first-time workers, boosting manufacturing, and encouraging employer participation, [the scheme] reflects smart, inclusive policymaking," said Dr. Anish Shah – Group CEO & Managing Director, Mahindra Group, and Immediate Past President, FICCI. "Its emphasis on dignity, security, and formalisation aligns deeply with industry aspirations."
The scheme is structured in two parts:
First-Time Employees: Aimed at 1.92 crore first-time employees, this component offers:
One month's EPF wage (up to Rs 15,000) paid in two installments.
Eligibility for workers earning up to Rs 1 lakh per month.
First instalment after six months of service, second after 12 months and completion of a financial literacy programme.
A portion of the incentive will be locked in a savings instrument to promote financial discipline.
Employer Incentives: To encourage employers to generate additional jobs:
Incentives of up to Rs 3,000 per month for each additional employee for two years, and four years for the manufacturing sector.
Applies to employees earning up to Rs 1 lakh per month.
Employers must hire at least two new employees (if workforce is less than 50 people) or five new employees (if workforce exceeds 50).
Expected to generate 2.6 crore additional jobs.
The incentive amount will vary depending on the wage slab of the employee:
For employees earning up to Rs 10,000 (EPF wage): Rs 1,000 per month.
Between Rs 10,001 and Rs 20,000: Rs 2,000 per month.
Above Rs 20,000 (up to Rs 1 lakh): Rs 3,000 per month.
Payments to employees will be made via Direct Benefit Transfer using the Aadhaar-based Payment System. Employers will receive incentives directly in PAN-linked accounts.
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