Cabinet Approves ₹99446 Crore Employment-Linked Incentive Scheme

The Union Cabinet, chaired by Prime Minister Narendra Modi, has sanctioned the Employment-Linked Incentive (ELI) Scheme with a total outlay of ₹99,446 crore to catalyze the creation of 3.5 crore formal jobs over a two-year period from 1 August 2025 to 31 July 2027. The scheme targets both first-time entrants to the labor force and employers across all sectors, with extended benefits for manufacturing.

Scheme Highlights

Part A – Incentive to First-Time Employees

• Offers a one-month wage subsidy (up to ₹15,000) to new EPFO-registered employees earning up to ₹1 lakh per month.
• Paid in two installments: first after six months of continuous service, second after 12 months upon completion of a financial literacy programme.
• Portion of subsidy earmarked in a savings instrument to encourage long-term savings.
• Expected to benefit 1.92 crore first-time workers.

Part B – Support to Employers

• Incentivizes additional employment with monthly payouts for each new hire retained for at least six months.
• Tiered incentives based on EPF wage slabs:
  – Up to ₹10,000: ₹1,000 per employee per month
  – ₹10,001–₹20,000: ₹2,000 per employee per month
  – ₹20,001–₹1,00,000: ₹3,000 per employee per month
• Extended incentives for manufacturing sector in years 3 and 4.
• Employers must add at least two new employees (firms with <50 staff) or five (firms with ≥50 staff).
• Aims to generate 2.60 crore jobs via employer incentives1.

All disbursements under both parts will be made through Direct Benefit Transfer: employee payments via the Aadhaar Bridge Payment System and employer incentives to PAN-linked accounts.