With unemployment, especially among youth, remaining a pressing challenge, the Government of India introduced the Employment-Linked Incentive (ELI) Scheme, as announced in the 2024 Union Budget. Approved by the Union Cabinet in July 2025, this initiative is part of a wider ₹2 lakh crore employment and skilling package, signaling a strategic pivot toward formal job growth and workforce formalization.
Key targets include:
- Generation of ~35 million new jobs between 1 August 2025 and 31 July 2027
- 1.92 crore first-time formal workforce entrants under the scheme’s employee incentive strand
- A total outlay between ₹99,446 cr and ₹1 trillion, emphasizing employment intensification and youth upskilling
1. ELI Scheme Structure
The ELI Scheme is segmented into Scheme A, B, and C, targeting both fresh employees and employers across sectors.
| Scheme Component | Target Beneficiaries | Eligibility Criteria | Incentive Details |
|---|---|---|---|
| Part A – First‑Time Employees (Supports hires between 1 Aug 2025 and 31 Jul 2027) | Individuals joining formal employment under EPFO for the first time | • EPFO-registered • Aadhaar-linked UAN & bank account required • Salary up to ₹1 lakh/month • Continuous service of 12 months • Completion of the financial literacy program | • One month’s EPF wage (max ₹15,000) • Paid in 2 tranches: first after 6 months, second after 12 months + literacy certificate • Portion of the second tranche held in savings to encourage long-term savings |
| Part B – Employer Incentive 2 years (for all sectors) (Both first-time EPFO employees and previously registered are counted) | EPFO-registered employers hiring additional employees | • New hires: ≥6 months continuous employment • Minimum new hires: 2 (if <50 employees), 5 (if ≥50) • Salary of hired employees up to ₹1 lakh/month | For all sectors: • ₹1,000/month for ≤₹10,000 salary • ₹2,000/month for ₹10,001–₹20,000 salary • ₹3,000/month for ₹20,001–₹1 lakh salary • Paid directly into PAN-linked employer bank account |
| Extended Manufacturing Support | Employers in the manufacturing sector | • Same eligibility as Part B, specifically manufactures | Additional 2 years of same incentive as Part B (i.e., total of up to 4 years of support)—supports sustained job creation |
2. Eligibility & Compliance Essentials
🧑 Employee Requirements
- First-time formal employees under EPFO or ESI aged 18–45 (some sectors may extend).
- Salary threshold: ≤ ₹1 lakh/month for full incentive; but some sources cite ₹50k cap for Scheme C/specific sectors.
- Must sustain employment for at least 12 months—failure to do so may forfeit incentives.
- Aadhaar-linked bank account and completion of financial literacy training are mandated.
🏢 Employer Requirements
- Must be EPFO-registered and compliant with labour laws (Minimum Wages Act, EPF & ESIC provisions, etc.).
- Meet hiring threshold: +2 employees (<50 staff) or +5 employees (≥50 staff).
- Hold new employees continuously for a minimum of 6 months; the incentive is refundable if the employee exits before 12 months in the Scheme.
- Registration via the EPFO/ESIC portal and workforce reporting for verification.
3. Preparing for the ELI Scheme
✅ For Employers
- Ensure EPFO registration & compliance: Align payroll systems to track UAN/Aadhaar linkage.
- Baseline workforce documentation: Establish current headcount.
- Plan strategic hiring: Batch onboarding near deadline for six-month retention checks.
- Embed skill & financial literacy training.
- Set up DBT/EPF admin workflows to manage applications, claims.
✅ For HR & Payroll Professionals
- Train HR teams on incentive eligibility, employee segmentation, and documentation.
- Set up dashboards to monitor thresholds and retention.
- Create SOPs for submitting claims and reconciling benefits.
✅ For Employees
- Activate UAN, link Aadhaar & bank accounts before July 2025.
- Enroll in the mandated financial literacy course to access the full benefit.
- Maintain employment continuity for 12 months.
4. Conclusion
The Employment-Linked Incentive Scheme marks a transformative leap in India’s labour strategy. By combining wage support for first-time job seekers and prolonged employer incentives—particularly in manufacturing—the government is pushing for a permanent shift toward formalisation, youth employment, and social security.
For professionals, it offers a golden opportunity to integrate fiscal incentives with growth plans. Employers can now turn hiring into a strategic advantage. When successfully implemented, the scheme could generate 35 million jobs, strengthen the organized workforce, and redefine India’s socio-economic fabric.
