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In a landmark move to address unemployment and boost economic growth, the Government of India has approved a massive ₹11.7 trillion (US$11.7 billion) employment-linked incentive (ELI) scheme. The initiative, cleared by the Union Cabinet on July 1, 2025, is expected to generate 35 million new jobs over the next two years.

This employment-centric reform is being hailed as one of the most ambitious workforce strategies in India’s recent history.

📌 What Is the ELI Scheme?

The Employment-Linked Incentive (ELI) scheme is a government-funded program aimed at encouraging businesses to hire and retain workers through direct wage subsidies.

Key features include:

• ₹11.7 trillion budget allocation over 2 years
• Target to create 35 million new formal jobs
• Focus on Tier-II and Tier-III cities
• Direct wage subsidies for new hires retained for 6+ months
• Emphasis on manufacturing, logistics, retail, and digital services

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🎯 Why This Matters

Unemployment and underemployment have been persistent challenges in India, especially in the wake of the pandemic and global economic disruptions. The ELI scheme aims to:

• Reduce joblessness, particularly among youth and women
• Strengthen India’s domestic labor market and consumption base
• Support MSMEs in scaling operations without financial hiring burden
• Foster regional employment opportunities outside metro cities

According to government estimates, the program could increase India’s labor force participation rate by up to 4% by 2027.

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🏭 Which Sectors Will Benefit Most?

The scheme is designed to be cross-sectoral but will prioritize the following high-growth industries:

• Electronics & mobile manufacturing
• Textiles and garments
• Automotive and auto components
• Food processing
• Logistics and warehousing
• Renewable energy
• Digital and IT-enabled services

These sectors are seen as high-potential employment generators with a strong multiplier effect on local economies.

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🏦 How Will It Work?

Eligible employers can apply through a dedicated government portal. Upon validation of employee data through Aadhaar and EPFO (Employees’ Provident Fund Organization), the government will directly credit wage subsidies into employer accounts—linked to sustained employment.

Eligibility Criteria:

• Registered MSMEs and large enterprises
• New employees with a minimum 6-month tenure
• Salary cap of ₹25,000/month per beneficiary

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📊 Projected Economic Impact

According to the Ministry of Finance:

• The scheme could boost India’s GDP by 1.2% annually over the next two years
• Household consumption may see a 10–15% rise due to increased income
• Formal sector job growth will improve long-term tax revenue and productivity

Experts have also noted the scheme’s potential to reduce migration pressure on metros by creating livelihood opportunities in regional hubs.

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🗣️ Industry Reactions

Industry bodies like CII and FICCI have welcomed the move, calling it “transformative.” Startups and MSMEs are particularly optimistic, as the wage support reduces their hiring risk in a volatile global market.

Labor economists, while supportive, urge the government to ensure:

• Transparent application and tracking mechanisms
• Skill-development linkages for long-term employment sustainability
• Adequate grievance redressal systems for employees

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🔚 Final Thoughts

India’s ₹11.7T employment-linked incentive scheme marks a bold step toward inclusive growth and job security. With its focus on sustained employment, regional balance, and sectoral development, the initiative could redefine the country’s labor landscape.

Whether it achieves its ambitious goal of 35 million new jobs will depend on effective implementation, real-time monitoring, and private sector participation.

Stay tuned to our blog for updates on rollout timelines, application processes, and industry case studies under this landmark scheme.