Govt Launches Employment Linked Incentive to Boost Manufacturing Jobs

The Indian government has taken a bold step toward revitalizing employment, especially in the manufacturing sector, with the recent launch of the Employment Linked Incentive (ELI) Scheme. With an impressive budget outlay of ₹99,446 crore, this scheme aims to generate over 3.5 crore new jobs in just two years, while simultaneously encouraging formal employment, EPFO enrolment, and tax compliance.

For businesses—especially MSMEs and startups in manufacturing—this could be a game-changer, and Chartered Accountants in Pune and across India should be well-equipped to guide clients in leveraging these incentives.

What’s the ELI Scheme All About?

Approved by the Union Cabinet on July 1, 2025, the ELI Scheme is designed with dual benefits:

1.Direct cash incentives for first-time employees

2. Subsidies for employers who create sustained jobs

Let’s decode the scheme in two parts.

Part A: Benefits for First-Time Employees

New employees joining the formal workforce (EPFO registered) for the first time will receive:

• ₹15,000 as a one-time wage incentive (split into two installments)
  • ₹7,500 after 6 months of continuous service
  • ₹7,500 after 12 months and completion of a basic financial literacy programme
• The maximum salary for eligibility: ₹1 lakh/month
• A portion of the incentive will be locked in a savings deposit, encouraging financial discipline

Expected impact: 1.92 crore youth entering formal employment with social security coverage and financial literacy—an essential push for a stable, compliant workforce.

Part B: Benefits for Employers (Special Focus on Manufacturing)

For employers, especially manufacturers in cities like Pune, this part is golden.

Incentive Structure for Employers:

To qualify:

• Firms with <50 employees must hire at least 2 additional workers
• Firms with ≥50 employees must hire at least 5 additional workers
• These hires must stay continuously employed for 6+ months

And here’s the cherry on top for the manufacturing sector:
Incentives are extended for up to 4 years (vs. 2 years for other sectors), providing long-term savings on employment costs.

 How This Helps Manufacturing Companies in Pune

Pune is a hub for automobile, precision engineering, pharma, and consumer goods manufacturing, and labor plays a crucial role in cost structure. This scheme:

• Reduces net hiring cost by up to ₹36,000 per employee/year
• Encourages formal onboarding under EPFO, simplifying labor law compliance
• Supports cash flow through Direct Benefit Transfers (DBT) linked to PAN and Aadhar
• Aligns with social security and ESG goals many global clients now demand

Tax & Compliance Advisory – Role of a CA

As a Chartered Accountant in Pune, it’s essential to:

• Help clients evaluate hiring plans and eligibility under ELI
• Ensure EPFO registration and compliance to receive benefits
• Assist in structuring payroll systems that maximize incentives
• Track employee tenure and installment-linked DBT timelines
• Align ELI benefits with other tax-saving instruments like:
  • Section 80JJAA (for additional employment)
  • Start-up benefits under Section 80-IAC
  • PSI Subsidies for Maharashtra industrial units

Real Impact: A Manufacturer’s View

“We hired 40 new workers for our second assembly line in Pune MIDC. With ELI and 80JJAA combined, we expect to save nearly ₹20 lakhs annually. Our CA firm helped us track eligibility, payroll compliance, and even EPFO reporting,” says a plant HR manager.

 Important Dates & Duration

• Jobs created between 1st August 2025 and 31st July 2027 qualify
• First-time employee incentives will be released via Aadhar-linked DBT
• Employer incentives will be credited to PAN-linked business accounts

Final Thoughts: Growth + Compliance = Long-Term Profitability

The ELI Scheme isn’t just a subsidy—it’s a strategic move to nudge India’s economy toward formalization, financial inclusion, and structured job creation. For manufacturers, especially SMEs looking to scale, and for CA firms in Pune advising industrial clients, this is the time to act.

Hire smart

Comply wisely

Maximize government benefits

Let your business grow, and let your workforce grow with you.

For expert advisory on ELI Scheme implementation, EPFO registration, and incentive-linked payroll structuring, connect with our team of CA professionals in Pune today.

Ministry of Labour & Employment

Cabinet Approves Employment Linked Incentive (ELI) Scheme

Scheme to Enhance Job Creation, Employability and Social Security in all Sectors

Focus on Manufacturing Sector and Incentives for First Timers

First Timers to get one month’s wage up to Rs 15,000/- in two installments Scheme to Support Employment Generation of more than 3.5 Crore Jobs in two Years with an Outlay of Rs one lakh Crore

Posted On: 01 JUL 2025 3:06PM by PIB Delhi

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, has approved the Employment Linked Incentive (ELI) Scheme to support employment generation, enhance employability and social security across all sectors, with special focus on the manufacturing sector. Under the Scheme, while the first-time employees will get one month’s wage (up to Rs 15,000/-), the employers will be given incentives for a period to two years for generating additional employment, with extended benefits for another two years for the manufacturing sector. The ELI Scheme was announced in the Union Budget 2024-25 as part of PM’s package of five schemes to facilitate employment, skilling and other opportunities for 4.1 Crore youth with a total budget outlay of Rs 2 Lakh Crore.

With an outlay of Rs 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 2 years. Out of these, 1.92 Crore beneficiaries will be first timers, entering the workforce. The benefits of the Scheme would be applicable to jobs created between 01^st August 2025 and 31^st July, 2027.

The Scheme consists of two parts with Par A focused on first timers and Part B focused on employers:

Part A: Incentive to First Time Employees:

Targeting first-time employees registered with EPFO, this Part will offer one-month EPF wage up to Rs 15,000 in two installments. Employees with salaries up to Rs 1 lakh will be eligible. The 1^st installment will be payable after 6 months of service and the 2^nd installment will be payable after 12 months of service and completion of a financial literacy programme by the employee. To encourage the habit of saving, a portion of the incentive will be kept in a savings instrument of deposit account for a fixed period and can be withdrawn by the employee at a later date.

The Part A will benefit around 1.92 crore first time employees.

Part B: Support to Employers:

This part will cover generation of additional employment in all sectors, with a special focus on the manufacturing sector. The employers will get incentives in respect of employees with salaries up to Rs 1 lakh. The Government will incentivize employers, up to Rs 3000 per month, for two years, for each additional employee with sustained employment for at least six months. For the manufacturing sector, incentives will be extended to the 3^rd and 4^th years as well.

Establishments, which are registered with EPFO, will be required to hire at least two additional employees (for employers with less than 50 employees) or five additional employees (for employers with 50 or more employees), on a sustained basis for at least six months.

The incentive structure will be as under:

*Employees with EPF wages up to Rs. 10,000 will get a proportional incentive.

This part is expected to incentivize employers for the creation of additional employment of nearly 2.60 crore persons.

Incentive Payment Mechanism:

All payments to the First Time Employees under Part A of the Scheme will be made through DBT (Direct Benefit Transfer) mode using Aadhar Bridge Payment System (ABPS). Payments to the Employers under Part B will be made directly into their PAN-linked Accounts.

With ELI Scheme, the government intends to catalyse job creation in all sectors, particularly in manufacturing sector, besides incentivizing youth joining the workforce for the first time. An important outcome of the Scheme will also be formalization of the country’s workforce by extending social security coverage for crores of young men and women.

******