The Union Cabinet’s approval of the Employment Linked Incentive (ELI) scheme has found favour with industry leaders, especially those associated with the micro, small, and medium enterprises (MSMEs) and labour-intensive markets including jewellery, leather goods, agro-processing, and textiles, since the nearly-1-crore-outlay plan is aimed at generating over 3.5 crore jobs in two years.
As per the scheme, employers would be offered up to ₹3,000 per month for each new employee who stays on payroll for at least six months. There would also be extended initiatives for the manufacturing sector, said a statement released by the ministry.
Large companies may have automated plants, but they too rely on medium and small units for inputs, therefore relying on their labour. Job creation has lagged behind manufacturing growth because of the increasing dependence on automation.
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Anant Goenka, Senior Vice President of FICCI and Vice Chairman of RPG Group, called it “much needed for the economy”.
Harsh Pati Singhania, CMD of JK Paper and former FICCI President, also welcomed the initiative, saying the scheme was designed to support smaller enterprises that comprise large parts of manufacturing supply chains. “While large companies may have automated plants, they rely on medium and small units for inputs. These sectors are still very labour-intensive,” he said.
The Cabinet also greenlit a new Research & Development Fund worth ₹1 lakh crore, said an official statement.
Stressing on the importance of investing in strategic sectors to reduce import dependency, Goenka said that he hoped that the additional R&D investment, which is currently between 1-2 per cent in India, will now go up.
Both Goenka and Singhania underscored the impact of the scheme on the economy. With MSMEs hiring more, consumer demand is expected to pick up, triggering growth. Formalisation of service sectors like transport and hospitality, enabled by digital payrolls and PF-linked employment, also means a wider base of firms can benefit.
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