One bold proposal from India includes Employment Linked Incentives amounting to 1 trillion rupees (~$11.7 billion) targeted at increasing Manufacturing jobs. This proposes that 35 million new jobs be created in the next two years. With both employers and first-time employees receiving subsidies, it can transform India’s industrial landscape through Employment-Linked Incentives. Let’s discuss its potential and what it means for manufacturers.
What Are Employment-Linked Incentives?
Employment-Linked Incentives were announced by Prime Minister Modi in July 2024 through the Union Budget. The Cabinet approved on July 1, 2025. It is aimed at providing wage and hiring incentives for Manufacturing job growth and formal employment. Through the scheme, a major step forward in India’s job strategy is the integration of the formalization of the labor force with objectives that are specific to production in different sectors.
Core Structure of Employment-Linked Incentives
- Part A – Employee Incentives: First-time entrants into formal jobs (registered with EPFO) get up to ₹15,000 gross wage – split into two installments over 12 months.
- Part B – Employer Subsidies: Employers hiring new EPFO-registered workers receive up to ₹3,000 per month for two years, provided employees stay for at least six months. Manufacturers enjoy an extra two-year extension.
This dual structure is central to boosting Manufacturing job growth by supporting both the supply (job seekers) and demand (employers) in Employment-Linked Incentives.
Why This Will Amplify Manufacturing Job Growth
1. High Incentives: From ₹15,000 to a Monthly ₹3,000
The Employment-Linked Incentives scheme provides ₹15,000/year for first-time employees. On the other hand, it grants an employer up to ₹3,000/month. The assistance for manufacturing firms lasts two years and can be extended for up to two more years, hence up to ₹72,000 – ₹1.44 lakh per hire overall. This sustained subsidy directly fuels Manufacturing job growth.
2. Focused on Formal, Productive Jobs
Employment-Linked Incentives tie together the incentivization of formal hiring, greater social security, and more reliable data—all by linking the disbursement of incentives to registration with EPFO. The formation of a formal workforce aligns with the objectives of “Make in India” and PLI concerning Manufacturing job growth.
3. Aligns with PLI & Manufacturing Expansion
India’s PLI schemes (electronics, EV, and pharmaceuticals) strengthen domestic industrial expansion. Employment-Linked Incentives India align well with these initiatives and are expected to boost manufacturing job growth in high-potential sectors
4. Bursting with Economic Energy
Youth unemployment remains a significant problem, notwithstanding an 8%+ GDP growth. Unemployment among the young in urban areas is around 17.9%, while in rural areas, it stands at 13.7%. The Employment-Linked Incentives initiative is square on target here, especially in building demand into hiring systems across sectors, with manufacturing being the keystone.
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Breaking Down the Numbers
Employment-Linked Incentives resources point to ₹1 trillion (~$11.7 billion) and aim to produce 35 million new jobs between August 2025 and July 2027.
- 19.2 million will be first-time entrants into the jobs market, supported by incentives to employees.
- More than 26 million will come from manufacturing-based employer incentives.
The extension includes an additional two years and thickens the Manufacturing job growth over and above the original baseline of 35 million jobs.
Manufacturing at the Epicenter
Why Manufacturing?
- It employs millions of people in India.
- It is the pivotal thrust for PLI and “Make in India.”
- The current manufacturing share (~15-16% of GDP) trails its global peers.
- It can capitalize on new opportunities brought about by global supply chain shifts.
The ELI scheme provides additional incentives for manufacturing organizations, which accentuates the government’s intent to develop formal, scalable Manufacturing job growth.
Sector-Specific Momentum
- Electronics PLI: Mobile exports have multiplied by 13 times since 2020.
- Semiconductor efforts: Still evolving but beckoning worldwide opportunities.
This backdrop—the rise of PLI, ELI’s support, and the diversification of the global supply chain—is well-poised to accelerate Manufacturing job growth across Indian industry verticals.
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Potential Hurdles & Considerations
- Weak Demand: Economist Santosh Mehrotra argues that Employment-Linked Incentives address labor supply but fail to tackle structural demand issues.”He suggests that a broader stimulus should enable large expansions in firms.
- Disparity in EPFO Registration: Registration with EPFO is crucial. However, about 85% of manufacturing jobs are informal; the success of this program will depend on how fast companies start formalizing their hiring processes.
- Administrative efficiency is required. By October 2024, the government had disbursed only 8% of the total funds earmarked for PLI. If ELI faces the same delays, it could hamper manufacturing job growth without the timely provision of incentives.
- Sustaining Momentum: The employer subsidy under ELI for manufacturing extends to four years; ensuring that these jobs ultimately stick requires infrastructure, skilling, demand, and investment.
Strategic Implications for Manufacturers
- Employers should hire EPFO-registered workers to avail of subsidies.
- Aggressively ramp up operations to match PLI momentum in electronics, EV, and pharmaceuticals, making hiring more attractive.
- Formalize the informal workforce by converting casual workers to EPFO for incentives and job security.
- Align skills by partnering with Skill India and other training initiatives tied closely to ELI goals.
- Keep an eye on the administrative rollout and incentive disbursement timelines.
Broader Economic Ripple Effects
- Formalization: Expanding EPFO coverage will bring more workers into the financial system.
- Increased consumption will result from newly employed people spending more.
- Investor Confidence: Policy stability in manufacturing and jobs generates capital attraction.
- Global Positioning: India stands to gain from changing supply chains as a ‘China+1’ destination.
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Final Verdict
The ₹1 trillion Employment-Linked Incentives initiative is India’s huge step forward in supercharging its Manufacturing job growth. Targeting 35 million jobs, EPFO formalization, and subsidies to employers in manufacturing, this initiative is preparing to change the face of industrial hiring in the country. Its conjunction with PLI and the global supply chain shift makes it even more powerful.
However, challenges remain—the success of such a demand stimulus, the speed of implementation, and outreach to the informal sector are key parameters of success. This is a once-in-a-lifetime alignment of policy, capital, and scale for manufacturers. Those willing to convert hires into the formal economy and ramp up production will profit.
Over the next few months, how manufacturers seize the moment with Employment-Linked Incentives will determine if India really makes a breakthrough in Manufacturing job growth, not just in numbers but in building a stronger, formal, and future-ready industrial workforce.
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Frequently Asked Questions (FAQ)
Q1: What do Employment-Linked Incentives (ELI) in India do?
A: Employment-Linked Incentives are a new government scheme, launched via the 2024 Union Budget and approved in July 2025, which provides both wage subsidies for first-time employees and hiring incentives for employers, especially in manufacturing, to boost formal job creation.
Q2: How do the Employment-Linked Incentives work for employees and employers?
A: First-time formal job entrants (registered with EPFO) receive up to ₹15,000 (in two installments over a year). Employers receive up to ₹3,000/month per new EPFO-registered worker for two years—manufacturers can get an additional two years, making it up to four years total.
Q3: What is the scale and target of India’s Employment-Linked Incentives scheme?
A: The ELI initiative earmarks ₹1 trillion (~$11.7 billion) with an ambition to create 35 million jobs by July 2027. Of these, over 19 million will enter the workforce for the first time, while employer incentives in manufacturing will create over 26 million jobs.
Q4: Why is the focus of ELI on manufacturing job growth?
A: Manufacturing is labor-intensive, pivotal for India’s GDP growth, and underperforms compared to global peers. With its large workforce and crucial “Make in India” and PLI strategies, ELI aims to formalize and expand jobs in this sector, accelerating industrial growth.
Q5: How does ELI align with other industrial policies like PLI?
A: ELI complements PLI schemes (e.g., electronics, EV, and pharmaceuticals) by offering job-based subsidies, making hiring and expansion for manufacturing firms more attractive, and amplifying domestic production and formal employment.