Boost for India’s Youth and Manufacturing Sector with Game-Changing Incentives

New Delhi, July 1, 2025 – In a transformative move to bolster India’s job market, the Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the Employment Linked Incentive (ELI) Scheme with an outlay of ₹99,446 crore. Announced as part of the Union Budget 2024-25, this ambitious initiative aims to create over 3.5 crore jobs within two years, with a special focus on empowering first-time employees and revitalizing the manufacturing sector. For the Indian-American community and readers of Masala Mirror, this scheme signals a robust push toward economic growth and opportunities for India’s youth, aligning with the nation’s vision of a Viksit Bharat (Developed India).

Key Features of the ELI Scheme

The ELI Scheme, effective from August 1, 2025, to July 31, 2027, is designed to enhance employability, formalize the workforce, and provide social security across all sectors, with a particular emphasis on manufacturing. The scheme is divided into two main components:

Part A: Incentives for First-Time Employees

• Who Benefits: Approximately 1.92 crore first-time employees entering the formal workforce and registered with the Employees’ Provident Fund Organisation (EPFO).
• Incentive Structure: Eligible employees earning up to ₹1 lakh per month will receive a one-month wage subsidy, up to ₹15,000, disbursed in two instalments:
  • First Instalment: After six months of continuous employment.
  • Second Instalment: After 12 months, upon completion of an online financial literacy course.
• Payment Mechanism: Funds will be transferred via Direct Benefit Transfer (DBT) using the Aadhaar Bridge Payment System (ABPS).
• Savings Incentive: A portion of the subsidy will be placed in a savings or fixed deposit account, encouraging financial discipline among young workers.
• Impact: This initiative supports freshers in all sectors, helping them navigate the initial productivity curve while integrating into the formal economy.

Part B: Support for Employers

• Who Benefits: Employers registered with EPFO who hire additional workers, with extended benefits for those in the manufacturing sector.
• Incentive Structure: Employers will receive up to ₹3,000 per month per additional employee for two years, with extended incentives for the third and fourth years in manufacturing:
  • ₹1,000/month for employees earning up to ₹10,000.
  • ₹2,000/month for employees earning between ₹10,001 and ₹20,000.
  • ₹3,000/month for employees earning above ₹20,000 (up to ₹1 lakh).
• Eligibility Criteria: Employers must hire at least:
  • Two additional employees for businesses with fewer than 50 employees.
  • Five additional employees for businesses with 50 or more employees.
• Sustained Employment: New hires must be retained for at least six months to qualify for incentives.
• Impact: This component is expected to generate 2.6 crore additional jobs, with manufacturing employers receiving extended support to drive long-term growth.

Focus on Manufacturing and Youth Employment

The ELI Scheme places a strong emphasis on the manufacturing sector, aligning with India’s Make in India initiative. By offering extended incentives for up to four years, the scheme encourages employers to create sustainable, high-quality jobs in manufacturing, a sector critical to India’s industrial strategy. The government has allocated ₹52,000 crore specifically for manufacturing job creation, expected to benefit 30 lakh youth and their employers.

For India’s youth, who face high unemployment rates (over 47% of the working-age population is unemployed or underemployed as of 2023), the ELI Scheme is a lifeline. By incentivizing first-time employment and skilling 20 lakh youth through a centrally sponsored program, the scheme addresses the mismatch between skills and industry demands. It also promotes gender diversity by encouraging businesses to hire women, offering benefits like maternity leave and childcare support to enhance workforce participation.

Additional Benefits and Broader Impact

• Formalization of Workforce: By linking incentives to EPFO enrollment and Aadhaar-based payments, the scheme ensures social security coverage for millions, fostering a more inclusive labor market.
• Skilling Initiatives: The ELI Scheme includes a program to skill 20 lakh youth, with internships for 1 crore youth in top companies over five years, enhancing employability and industry readiness.
• Economic Growth: The scheme is expected to stimulate economic activity, reduce unemployment, and support India’s goal of becoming a global manufacturing hub. Industry leaders like Chandrajit Banerjee of CII and Puneet Gupta of EY India have hailed the initiative as a “significant milestone” for inclusive workforce development.

Implementation and Eligibility

To avail of the benefits, employees must activate their Universal Account Number (UAN) and link their Aadhaar to their bank accounts by March 15, 2025, for the current financial year. Employers must maintain increased employment levels and ensure EPFO contributions for eligibility. The Ministry of Labour & Employment has directed the EPFO to work in campaign mode to facilitate Aadhaar-based UAN activation by November 30, 2024, for new joiners.

Industry and Government Perspectives

Information and Broadcasting Minister Ashwini Vaishnaw emphasized, “The ELI Scheme will catalyze job creation across all sectors, particularly in manufacturing, while incentivizing youth joining the workforce for the first time.” Industry experts like Anish Shah of FICCI have praised the scheme’s focus on dignity, security, and formalization, noting its potential to transform India’s job market.

Why This Matters for the Indian-American Community

For the Indian-American community, the ELI Scheme represents a significant step toward strengthening India’s economy, creating opportunities for youth, and enhancing the country’s global competitiveness. As many Indian-Americans maintain ties with India through investments, family, or educational exchanges, this scheme’s focus on job creation and skilling aligns with their aspirations for a prosperous India. It also opens doors for potential collaborations between Indian and U.S. businesses, particularly in manufacturing and technology sectors.

Conclusion

The Employment Linked Incentive Scheme, with its ₹1 lakh crore investment, is poised to be a game-changer for India’s youth and economy. By incentivizing first-time employees and employers, particularly in manufacturing, the scheme addresses unemployment, enhances employability, and promotes social security. As India strides toward a Viksit Bharat, the ELI Scheme stands as a testament to the government’s commitment to empowering its workforce. Stay updated on this transformative initiative and more at www.masalamirror.com.