The Modi government has recently launched a new scheme, the ‘Employment Linked Incentive Scheme’ (ELI), in the Union Budget 2024. This scheme aims to promote exports by providing incentives to manufacturers and exporters. The government believes that this will help Indian products gain a strong foothold in the market, strengthen domestic industries, and increase foreign exchange.
To implement this scheme more effectively, the government has allocated funds to various ministries. The Ministry of Corporate Affairs has been given Rs 2,000 crore to increase internship opportunities for youth in 500 companies. Similarly, the Ministry of Labor has received Rs 10,000 crore to implement the remaining policies related to ELI. Throughout this article, we will elaborate on this unique scheme of the Indian government.
What Is the ELI Scheme?
The ELI (Employment Linked Incentive) Scheme is a combination of three different schemes aimed at improving employment opportunities and supporting employers. Here’s a breakdown of each component:
1. Salary Subsidy
The first scheme, called ‘Salary Subsidy’, is designed to benefit about 1 crore employees. It will run for two years and provide financial assistance of up to Rs 15,000 in three instalments to new employees whose monthly salary is up to Rs 1 lakh. To receive the second instalment, the employee must complete an online financial literacy course. If the employee loses their job before 12 months, the company must return the subsidy.
2. Employment in the Manufacturing Sector
The second scheme, ‘Employment in Manufacturing Sector’, focuses on encouraging employers in the manufacturing sector. Employers must have a track record of at least three years with the Employees’ Provident Fund Organization (EPFO). Additionally, they must hire at least 50 non-EPFO employees or 25% of the number of EPFO employees from the previous year, whichever is lower. The subsidy will be paid over four years, split equally between the employee and employer, and based on the salary.
3. Support to Employer
The third scheme, ‘Support to Employer’, is designed for employers who increase their workforce. Employers can receive up to Rs 3,000 per month in reimbursement for their EPFO employer contribution for two years. However, there are conditions:
- Employers with fewer than 50 employees must hire at least two new employees.
- Employers with 50 or more employees must hire at least five new employees. If a company creates more than 1,000 jobs, reimbursement will be done quarterly, based on the previous quarter’s data. Employers who benefit from the second scheme cannot access this one, but those benefiting from the first scheme (Salary Subsidy) can use this scheme as an additional benefit.
How to Apply for the ELI Scheme: Step-by-Step
1. Check Eligibility
- Employees: Must be a new hire with a salary up to Rs 1 lakh.
- Employers: Must have 3+ years with EPFO and meet employee hiring criteria.
2. For Employees:
- Step 1: Get hired by an eligible employer.
- Step 2: Employer applies for your subsidy.
- Step 3: Complete an online financial literacy course to unlock further benefits.
3. For Employers:
- Step 1: Register on the Ministry of Labour portal.
- Step 2: Submit workforce and salary details.
- Step 3: Apply for subsidy or reimbursement (based on the scheme).
4. Approval & Payments:
- Step 1: Wait for government approval.
- Step 2: Receive subsidies or reimbursements as per the scheme.
5. Monitor and Reapply:
- Keep track of subsidies and reapply if needed (especially for large-scale hiring).