The Modi government has approved the Employment Linked Incentive (ELI) Scheme to boost employment generation, enhance employability, and improve social security across various sectors, with a particular emphasis on the manufacturing sector. The scheme, which was initially announced in the Union Budget 2024-25, is part of a larger package of five schemes designed to facilitate employment, skilling, and other opportunities for 4.1 crore youth, with a total budget outlay of ₹2 lakh crore.

With a significant outlay of ₹99,446 crore, the ELI Scheme aims 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 are expected to be first-time entrants into the workforce. The benefits of the scheme will be applicable to jobs created between August 1, 2025, and July 31, 2027.

The ELI Scheme is structured into two main parts:

• Part A: Incentive to First-Time Employees: This part of the scheme targets first-time employees who are registered with the Employees' Provident Fund Organisation (EPFO). It offers a one-month EPF wage, up to ₹15,000, which will be provided in two installments. Employees with salaries up to ₹1 lakh are eligible for this incentive. The first installment will be payable after six months of service, and the second installment will be payable after twelve months of service, following the completion of a financial literacy program by the employee. To encourage saving habits, a portion of the incentive will be kept in a savings instrument or deposit account for a fixed period, which the employee can withdraw at a later date.
• Part B: Employer Support Programme: This component focuses on incentivizing the creation of additional employment across all sectors, with a particular emphasis on the manufacturing sector.

Under the ELI scheme, first-time employees in the formal sector will receive a direct benefit transfer of one month's salary in three installments, up to ₹15,000, upon enrolling in the EPFO. To claim the second installment, employees must complete a mandatory online Financial Literacy course. Eligibility requirements include EPFO enrollment and a monthly salary of less than ₹1 lakh.

The government intends to catalyze job creation across all sectors, especially in manufacturing, and incentivize young individuals to join the workforce for the first time. A key outcome of the ELI Scheme is the formalization of the country's workforce by extending social security coverage to crores of young men and women.

To avail the ELI scheme benefits, employees must enroll in EPFO and ensure their Aadhaar is linked to their bank account. The EPFO has extended the deadline for UAN (Universal Account Number) activation and Aadhaar seeding to June 30, 2025, for employees joining in FY 2024–25.

The ELI scheme is expected to benefit around 1.92 crore first-time employees and generate more than 3.5 crore jobs in the country over two years. The scheme will provide financial support to both employees and employers, promote job creation, enhance employability, and expand social security coverage. By focusing on skill development, particularly transversal skills like digital literacy, problem-solving, and communication, the ELI Scheme aims to enhance the workforce's readiness to meet evolving industry demands.