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Employment Linked Incentive Scheme: A Catalyst for Employment Generation

July 10, 2025 | Labor & Employment

With a budget of Rs.99,446 crore, the Indian government has introduced the Employment Linked Incentive (ELI) scheme with the goal of generating jobs, especially in the manufacturing sector. This article will focus on this scheme, exploring its different benefits, eligibility criteria, and other regulatory compliance measures. Read to find out how you can benefit from this scheme.

Employment Linked Incentive Scheme: A Catalyst for Employment Generation
The Government of India recently introduced the Employment Linked Incentive (ELI) Scheme, which encourages businesses and employers to hire more employees, especially new entrants to the workforce, thereby, increasing job creation.

The Union Cabinet approved this scheme on July 1st, 2025. It is aimed at generating employment mainly in the manufacturing sector. The Cabinet has allocated ?99,446 crore for the implementation of the scheme. The ELI scheme seeks to boost jobs, particularly among marginalized sectors of the workforce and new graduates.

For companies and businesses as well, this scheme can prove to be a boon, provided the framework of the scheme and other obligations that are to be complied with, are understood. Two schemes will be implemented as part of this initiative. These schemes will cover the jobs generated between August 1st, 2025, to July 31st, 2027. Let us explore the benefits, eligibility criteria, and other regulatory compliance measures of these schemes.

Scheme A: A Boon for First Timers

Part A of the ELI Scheme or Scheme A is specifically for people who have just joined the workforce in all formal sectors. As per this scheme, all newly entering the workforce will be given one-month EPF (Employees’ Provident Fund)wage (up to Rs.15,000). This incentive will be given in two installments. The first installment of this financial assistance will be given after six months, and the second installment will be given after twelve months, providing that a financial-literacy program is completed. A part of this benefit must also be kept in a savings account for a specific amount of time, which can be withdrawn later, thus encouraging savings behavior among individuals. The purpose of this program is to explicitly encourage people to start working and make their first contributions to EPF.

To be qualified for this benefit, some criteria are that the individual must not be earning more than Rs.1 lakh per month, should be enrolled on the EPFO (Employees’ Provident Fund Organization), and should be a permanent resident of India.

Scheme A is meant to lower the beginning costs to entry related to starting a new job, which recognizes the financial hurdles many new hires face when starting their first job. By making payments to the EPF, additionally, a culture of savings is promoted, which assists social welfare in the future.

All payments to the first timers by the government will be made via Direct Benefit Transfer mode using the Aadhar Bridge Payment System. It is projected that Scheme A will deliver benefits to roughly 1.92 crore new hires.

Scheme B: Support to Establishments

Scheme B is driven by the goal of generating additional and sustained employment opportunities in all sectors, especially the manufacturing sector. As per this scheme, certain benefits will be given to employers to incentivize them to hire more people. With regard to employees earning up to Rs.1 lakh per month, the employers will receive incentives. For every additional employee who has been employed continuously for at least six months, the government would provide employers with incentives of up to Rs.3,000 per month for two years. Incentives will also be offered for the third and fourth years for the manufacturing sector. Businesses that are registered with EPFO will have to hire at least two more workers (for businesses with less than 50 employees) or five more workers (for businesses with 50 or more employees) on a continuous basis for a period of at least six months. All the payments to employers shall be made directly to their bank accounts linked to their PAN Cards.

EPF Wage Slabs of Additional Employee           Benefit given to the Employer (for every additionalemployment per month)
Up to Rs.10,000* Upto Rs.1,000
More than Rs.10,000 and up to Rs.20,000 Rs.2,000
More than Rs.20,000 (upto wage of Rs.1 lakh per month) Rs.3,000

*Proportionate incentive will be given to employees with EPF wages up to Rs.10,000.

It is anticipated that this scheme will incentivize employers to generate additional employment opportunities for almost 2.60 crore people.


Steps to Apply for the ELI Scheme Online in Brief

  • To apply for the ELI Scheme, individuals must go to the EPFO website
  • The website’s homepage will appear, and you will need to choose the 'Apply Online' option under the 'Online Services' section.
  • After that, complete the application form fully and send in all necessary supporting documentation.
  • Verify that all the information provided is accurate and free of errors.
  • You can then apply for the scheme by choosing the ‘Submit’ button.
In conclusion, the ELI scheme advances the country’s socioeconomic development by aiming to create more than 3.5 crore jobs. Apart from creating more jobs, and driving up opportunities for newcomers to the workforce, the scheme also promotes systematic enrollment in the EPFO for the youth, enhancing a culture of savings.

The program also serves as a powerful stimulant for the revival of labor-intensive manufacturing industries by providing long-term incentives to increase growth and productivity.

As a legal practice dedicated to remaining on the cutting edge of legislative and regulatory advancements, we are aware of the profound impacts this program has on companies, employees, and other industry participants. If you have anyqueries or would like some guidance on how to get maximum benefits from this scheme, please feel free to reach out to us at office@indialawoffices.com.

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