The Employment Linked Incentive (ELI) schemes, approved by the Union Cabinet on Tuesday, are likely to give a major push to formal sector employment with most experts and industry bodies noting that these are likely to help first time job seekers.
Announced in the Union Budget 2024-25, the two ELI schemes have an outlay of Rs 99,446 crore and aim to incentivize the creation of more than 3.5 crore jobs in the country, over a period of two years. “Out of these, 1.92 crore beneficiaries will be first timers, entering the workforce,” said an official release following the approval from the Union Cabinet. The benefits of the scheme would be applicable to jobs created between August 1, 2025, and July 31, 2027.
Sources said the schemes have been formulated with feedback and discussions from industry to understand their requirements. Targeting first-time employees registered with EPFO, this Part will offer a one-month EPF wage up to Rs 15,000 in two instalments. Employees with salaries up to Rs 1 lakh will be eligible.
The second scheme will cover the 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 incentivise employers, up to Rs 3000 per month, for two years, for each additional employee with sustained employment for at least six months.
Puneet Gupta, Tax Partner, EY India said the ELI streamlines the previous framework into two impactful schemes aimed at driving job creation and supporting first-time employees. According to him the second scheme or Scheme B is particularly beneficial for employers looking to expand their teams. “It offers an incentive of up to Rs 3,000 per additional employee per month. Employers in the non-manufacturing sector can access this support for two years, while those in the manufacturing sector can enjoy it for four years,” he said.
For example, an employer in the non-manufacturing sector hiring 100 additional employees could receive up to Rs 72 lakh over two years, while a manufacturing sector employer could benefit from an impressive Rs 1.44 crore over four years, he explained.
Chandrajit Banerjee, Director General, Confederation of Indian Industry said the ELI is a significant step towards boosting employment and formalising India’s workforce. “ELI scheme opens doors for first-time job seekers, empowering them to contribute meaningfully to India’s growth story. It empowers employers to expand their workforce and gives a decisive push to India’s labour – intensive sectors,” he noted.
