Government-backed employment incentives plan worth INR 845.39 billion (approximately $11.7 billion USD) given green light, aiming to generate 35 million new job opportunities in India.

Government-backed employment incentives plan worth INR 845.39 billion (approximately $11.7 billion USD) given green light, aiming to generate 35 million new job opportunities in India.

**India's Employment-Linked Incentive (ELI) Scheme: A 1 Trillion Rupee Job Creation Initiative**

The Indian federal cabinet has approved a major job creation initiative, the Employment-Linked Incentive (ELI) scheme, with a budget of 1 trillion rupees. The scheme aims to generate nearly 35 million jobs over two years, with a focus on formalizing employment and boosting the manufacturing sector [1][2].

**Key Details of the ELI Scheme**

The ELI scheme, part of a broader package focused on job creation, skill development, and opportunities for around 41 million young people, is structured to last for two years, with an extension of up to four years for the manufacturing sector to foster longer-term employment growth [1].

**Scheme Components**

The ELI scheme is divided into two parts:

1. Part A: For First-Time Employees - Targeting approximately 1.92 crore new employees, this part offers a benefit equivalent to one month's EPF wage (up to ₹15,000) for first-time entrants into the formal workforce. - The benefit is disbursed in two installments: the first after six months of continuous employment and the second after one year, provided the employee completes a financial literacy program. - A portion of the benefit is allocated to a savings instrument to encourage long-term saving habits.

2. Part B: For Employers - This part provides incentives to employers who hire additional employees. - Employers receive up to ₹3,000 per month per additional employee, sustained for at least six months, with the condition that eligible employees must have a monthly salary up to ₹1 lakh. - Employers registered with the Employees Provident Fund Organisation (EPFO) must demonstrate sustained hiring: at least two new employees if under 50 staff, or five new employees if above 50 staff, each retained for a minimum of six months.

**Sectors Targeted**

The scheme is applicable across all sectors, with a special focus on manufacturing to encourage stable and long-term job creation within the industry [1][2].

**Eligibility Criteria**

- Employees must be first-time registered with the EPFO. - Employees’ gross monthly salary should not exceed ₹1 lakh. - Employers must be registered with EPFO and meet the minimum new hiring thresholds (2 or 5 employees depending on size). - The benefit for employees is conditional on continued employment and completion of a financial literacy course by the one-year mark.

**Benefits Summary**

| Beneficiary | Benefit Description | Duration | Conditions | |---------------------|-----------------------------------------------------------------|---------------------------------|--------------------------------------------------| | First-time employees | One month’s wage up to ₹15,000 in 2 instalments | Over 1 year | Employment sustained 6 and 12 months; financial literacy course completion | | Employers | Up to ₹3,000/month per additional employee with salary ≤ ₹1 lakh | 2 years (4 years for manufacturing) | Sustained hiring (2 or 5 new employees retained 6 months), EPFO registration |

This scheme aims to formalize employment, especially for youth entering the workforce for the first time, while encouraging employers to create and sustain jobs, particularly in manufacturing, through targeted financial incentives [1][2].

The total outlay of the job creation package introduced by the Indian federal cabinet is 2 trillion rupees, spread over 5 years. Despite an average annual growth of more than 8% over the last four years, unemployment remains a major political challenge in India, with Asia's third-largest economy having a jobless rate that has remained higher than 5% [3]. Unemployment among urban youth aged 15 to 29 years rose to 17.9% in May from 17.2% in April, and in rural areas, youth unemployment climbed to 13.7% from 12.3% in the same period [4]. Nearly 45% of India's workers still rely on agriculture [5].

The ELI scheme was first announced by Prime Minister Narendra Modi in the federal budget in July 2024 [6]. The benefits of the ELI scheme will apply to jobs created between August 2025 and July 2027, with the manufacturing sector receiving extended benefits for another two years [1][2].

1. The Employment-Linked Incentive (ELI) scheme, designed to bolster the manufacturing sector and create jobs, offers financial incentives to employers who hire additional workers, with the possibility of receiving up to ₹3,000 per month per employee, provided they meet certain conditions.
2. The ELI scheme, a cornerstone of India's job creation initiative, provides first-time employees with a financial benefit equivalent to one month's EPF wage (up to ₹15,000) once they complete six months of continuous employment and a financial literacy program, with the aim of encouraging long-term savings and formalizing employment, particularly among youth entering the workforce for the first time.

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