Building on to the foundation of various Production Linked Incentive (PLI) schemes offering financial incentives tied to production targets, the government is now set to launch three Employment Linked Incentive (ELI) schemes as part of the Prime Minister’s comprehensive economic package. These new schemes aim to address unemployment and stimulate growth in the manufacturing sector.
Implications and Benefits
These ELI schemes complement existing PLI schemes, which have historically been announced independently. While the PLI schemes focus on boosting domestic manufacturing through financial incentives tied to production targets, the ELI schemes aim to ensure that this growth translates into substantial employment opportunities.
The First Timers scheme will help integrate fresh graduates and new entrants into the formal economy, providing them with a stable income and reducing the initial financial burden of starting a career. The Job Creation scheme, by offering incentives tied to EPFO contributions, encourages employers to expand their workforce, thus driving employment and industrial growth. Meanwhile, Support to Employers scheme offers significant benefits to employers by reducing the financial burden of hiring additional employees by reimbursing certain amount of EPFO contribution for two years which makes it more cost effective to expand work force, particularly for small and medium sized enterprises.
In conclusion, the introduction of these ELI schemes underscores the government’s commitment to tackling unemployment and stimulating economic growth. By providing targeted support to both employees and employers, these schemes are poised to create a more dynamic and inclusive job market, fostering a robust economic environment conducive to sustained industrial development. As the finer details of these schemes are awaited, stakeholders across the manufacturing landscape are keen to explore how these incentives can be leveraged to achieve the twin goals of industrial growth and employment generation.
A version of this article was published in Deccan Herald on July 24 2024. The same can be read here
Author
Nikit Popli
Partner, Indirect Tax
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