India’s Employment Linked Incentive (ELI) Scheme
CA Amit Bansal
CA Amit Bansal is a Fellow Chartered Accountant with over a decade of experience in accounting, auditing, and advisory. As Partner at GMCS & Co. and Founder of ABVS Management Consultancy, he leads key assurance and compliance projects across industries. He holds ICAI certifications in Forensic Accounting (FAFD), Concurrent Audit of Banks, ADR, and IND AS, and is a certified Peer Reviewer, known for his commitment to audit quality and integrity.
Introduction: At the Crossroads of Policy and Recruitment
India’s Employment Linked Incentive (ELI) Scheme, launched in July 2025 and applicable from August 1, 2025, through July 31, 2027, is a government-backed initiative designed to accelerate formal job creation. With a substantial outlay of ₹99,446 crore, the ELI Scheme is a dual-benefit policy that rewards both employers and employees, especially in sectors such as manufacturing.
For companies like RBS Alltech, this initiative presents a strategic opportunity to re-engineer hiring practices while benefiting from government incentives. This analysis examines how the ELI Scheme aligns with RBS Alltech’s workforce expansion goals and the potential benefits it may offer.
Scheme Structure: Two-Way Incentive System
- Employee Incentives (Part A)
This part of the scheme targets first-time entrants into the formal workforce, particularly those earning ₹1 lakh per month or less. Key highlights include:
a. A total incentive of ₹15,000 per employee, disbursed in two stages:
- After six months of continuous employment.
- After twelve months, upon successful completion of a financial literacy program.
b. A portion of the incentive is saved in a locked account to encourage long-term financial behavior.
The goal is to benefit approximately 1.92 crore individuals who are joining formal employment for the first time.
- Employer Incentives (Part B)
This component directly benefits employers who create new formal jobs. It is designed to reduce the cost burden of hiring and retaining talent:
a. Employers receive ₹1,000 to ₹3,000 per month per new employee for two years.
- ₹1,000 for salaries up to ₹10,000
- ₹2,000 for salaries between ₹10,000–₹20,000
- ₹3,000 for salaries between ₹20,000 and ₹1 lakh
b. For manufacturing companies, the incentive extends into the third and fourth years.
c. To qualify, small enterprises (less than 50 workers) must hire at least two new employees, and larger firms must hire a minimum of five.
d. All new hires must remain employed for at least six months to be eligible under the scheme.
This part of the scheme is projected to support over 2.6 crore new job roles across sectors.
How RBS Alltech Can Benefit
While RBS Alltech may not qualify as a large-scale manufacturer, it can still derive significant value from the ELI Scheme, provided it meets specific eligibility criteria.
1. EPFO Registration Compliance
RBS Alltech must ensure all employees are registered under the Employees’ Provident Fund Organisation (EPFO), and each recruit must have an Aadhaar-linked Universal Account Number (UAN).
2. Meeting Hiring Thresholds
Depending on its employee strength:
a. If RBS Alltech employs fewer than 50 workers, it must hire at least two additional employees to qualify.
b. For companies with more than 50 employees, the minimum new hires rises to five.
All new hires must earn ₹1 lakh or less per month and remain employed for at least six months.
3. Scheme Validity Period
All hiring activities must be completed between August 1, 2025, and July 31, 2027, for the firm to avail the incentives.
4. Additional Manufacturing Benefits
If RBS Alltech engages in any manufacturing activities or expands into that domain, it can enjoy extended incentives for up to four years, twice the standard benefit duration.
Strategic Recommendations for Hiring
To maximize the potential of the ELI Scheme, RBS Alltech should implement the following hiring strategies.
A. Focus on Fresh Entrants
Hiring individuals entering formal employment for the first time can unlock dual incentives—one for the company and one for the employee. This group may include recent graduates or professionals transitioning from informal to formal employment.
B. Optimize Compensation Bands
Employees earning between ₹20,000 to ₹1 lakh per month attract the highest employer incentive. RBS Alltech can structure compensation to take advantage of this benefit without compromising job quality or candidate profiles.
C. Hire in Phases
Rather than hiring in a single batch, spreading recruitment across multiple quarters can maintain a continuous incentive stream. It also offers better control over onboarding and integration.
D. Verify Manufacturing Credentials
If RBS Alltech can position itself within the manufacturing classification—even through expansion or product diversification—it can gain two additional years of incentive eligibility.
E. Strengthen Administrative Systems
The company should establish robust HR and payroll processes to manage EPFO compliance, Aadhaar linking, UAN generation, and government documentation.
Financial Illustration
Let’s assume RBS Alltech hires 50 new employees earning ₹30,000/month:
- Employer Incentive: ₹3,000 per employee = ₹1.5 lakh per month → ₹36 lakh over two years
- Employee Incentive: ₹15,000 per employee = ₹7.5 lakh total
- Cumulative Benefit: ₹36 lakh (employer) + ₹7.5 lakh (employee) = ₹43.5 lakh
If the company falls under the manufacturing category and retains these hires for four years, the employer incentive alone could rise to ₹72 lakh.
Broader Impacts
1. Brand Enhancement
By participating in a national employment initiative, RBS Alltech positions itself as a socially responsible and forward-thinking employer.
2. Improved Retention
Tying incentives to long-term employment and financial education encourages stability, reducing attrition.
3. Formalization and Growth
The scheme provides an opportunity for the company to expand its footprint in a structured, compliant, and government-backed manner.
Risks and Considerations
- Compliance Complexity: Ensuring all regulatory and documentation requirements are met can be time-intensive.
- Retention Thresholds: The incentives are conditional upon employee retention; early exits can reduce or cancel benefits.
- Financial Management: Accurate record-keeping, salary structuring, and UAN validation are essential for smooth disbursement.
Suggested Roadmap for RBS Alltech
Step | Action |
1 | Conduct an internal audit to confirm EPFO and Aadhaar linkages |
2 | Plan phased recruitment aligned to eligibility thresholds |
3 | Structure salaries to optimize incentives |
4 | Ensure that onboarding includes financial education modules |
5 | Track all hires, retention periods, and incentive disbursement |
Conclusion: Aligning Policy with Opportunity
The ELI Scheme is more than a financial relief measure—it’s a structural push toward formal employment and social security coverage. For companies like RBS Alltech, the program offers a smart, low-cost pathway to scale up operations, enhance employee retention, and demonstrate commitment to national development goals.
By adopting a structured hiring plan, fulfilling compliance requirements, and aligning HR strategies with government priorities, RBS Alltech can not only reduce its workforce costs but also position itself as a progressive and policy-aligned employer in India’s evolving job market.
For any clarifications or queries, please feel free to reach out to us at admin@fintracadvisors.com
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