ELI on the heels of PLI represents Modi govt's strategic continuum to transform India’s economic landscape

Together, the PLI and ELI schemes exemplify a holistic and future-ready approach to India’s economic transformation, writes the author. Bloomberg

By Aseervatham Achary

The Narendra Modi-led government has once again demonstrated its commitment to India’s economic growth and employment generation with the launch of employment-linked incentive (ELI) scheme. Building upon the grand success of the production-linked incentive (PLI) scheme, the ELI scheme is another visionary step toward realising the twin goals of ‘Atmanirbhar Bharat’ and ‘Rozgar Yukt Bharat’.

Before delving into the ELI scheme, it is important to appreciate the phenomenal success and impact of the PLI Scheme, which has transformed India's manufacturing sector.

In 2020, when the world was grappling with a pandemic-induced economic slowdown, India under PM Modi turned crisis into opportunity. The PLI Scheme was born - not merely as an economic recovery measure, but as a bold strategic push to position India as a global manufacturing hub. Today, as the PLI Scheme nears the peak of its impact, the government has taken another visionary leap with the launch of the ELI scheme.

Together, these initiatives represent a transformative shift in how India approaches industry, investment, and jobs moving beyond welfare economics to performance-linked, outcome-driven policy frameworks that reward productivity, innovation, and long-term economic resilience.

PLI: Redefining India’s Industrial Landscape

The PLI scheme has already reshaped the contours of Indian manufacturing. With an aim to reduce import dependence, boost exports, and encourage large-scale investments, the scheme targets high-potential sectors including electronics, pharmaceuticals, automobiles, telecom, textiles, solar energy, and drones.

As of August 2024, investments worth Rs 1.46 lakh crore have been realized under the PLI framework, with projections estimating this figure will cross Rs 2 lakh crore within a year. Production and incremental sales under the scheme have reached Rs 12.5 lakh crore, generating over 9.5 lakh jobs and expected to touch 12 lakh soon. Exports under the PLI ecosystem have surged past Rs 4 lakh crore, positioning Indian products competitively on the global stage.

In electronics, India has gone from a net importer to a net exporter of mobile phones. In 2014-15, India produced 5.8 crore handsets; by 2023-24, that number had surged to 33 crore, with exports hitting 5 crore units. The sector also saw a 254% increase in FDI, affirming investor confidence in India’s policy architecture.

The pharmaceutical sector too witnessed a structural uplift. India is now the third-largest producer by volume globally, with 50% of output dedicated to exports. Indigenous manufacturing of critical ingredients like Penicillin G has reduced import dependence. In the automotive sector, the scheme attracted ₹67,690 crore which is well above the targeted outlay helping build domestic capabilities in electric mobility and high-end automotive components.

Telecom and renewable energy have seen similar success. Under the solar PLI, India is rapidly adding domestic capacity to meet its energy transition goals. Telecom manufacturing, driven by PLI, has already achieved 60% import substitution, turning India into an exporter of 4G and 5G equipment. Drone manufacturing, propelled by MSMEs and startups, has seen seven-fold revenue growth.

These successes were made possible not just through incentives, but through bold policy reforms. The liberalization of the FDI regime allowing 100% FDI in coal, contract manufacturing, telecom, and even the space sector has attracted $165 billion in FDI equity in the manufacturing sector between 2014 and 2024, a 69% increase over the previous decade.

ELI: A Bold New Chapter in Employment Generation

Carrying forward this momentum, the Modi government has now approved the ELI scheme, a landmark initiative aimed at generating over 3.5 crore jobs across the country. Announced in the Union Budget 2024–25 as part of the Prime Minister’s comprehensive employment package, the scheme is backed by an outlay of Rs 99,446 crore, and is one of the most ambitious employment generation programmes in India’s history.

Announced as part of a Rs 2 lakh crore employment package in the Union Budget 2024-25, the ELI scheme is designed to support both first-time workers and the employers who hire them.

Under Part A, first-time employees registered with the Employees’ Provident Fund Organisation (EPFO) will receive a one-month EPF wage (up to Rs 15,000), disbursed in two instalments -after six and twelve months of continuous employment. The second instalment is linked to completion of a financial literacy programme, fostering not only income security but also financial awareness. A portion of the benefit will be parked in a savings instrument to inculcate the habit of long-term savings. This part alone will benefit 1.92 crore youth entering the formal workforce for the first time.

Part B focuses on incentivising employers across all sectors with special emphasis on manufacturing. For every additional employee retained for at least six months, the government will offer an incentive of up to Rs 3,000 per month, for a period of two years. In the manufacturing sector, this incentive will continue for a third and fourth year, reinforcing the government’s focus on industrial growth. To ensure meaningful job creation, establishments must hire a minimum of two new workers (for firms with fewer than 50 employees) or five (for larger firms), and ensure job continuity for six months.

The ELI scheme, more than offering financial incentives, seeks to embed a culture of sustained, formal employment across industries. It not only bridges the gap between job-seekers and job-creators but creates an ecosystem of stability, skilling, and social security.

A Strategic Continuum: From ‘Make in India’ to ‘Rozgar Yukt Bharat’

Together, the PLI and ELI schemes exemplify a holistic and future-ready approach to India’s economic transformation. The former ensures industrial strength and global competitiveness, while the latter guarantees that growth translates into jobs, incomes, and upward mobility for India’s vast working population.

This dual thrust of capital and capability on one hand, and employment and empowerment on the other is what distinguishes Prime Minister Modi’s governance philosophy. It is not limited to announcements or aspirations; it is defined by delivery and accountability.

As global economies confront uncertainty, India is scripting a different story—one of confidence, resilience, and ambition. The PLI Scheme has redefined manufacturing. The ELI Scheme now promises to redefine employment. Together, they pave the way for a truly Atmanirbhar and Rozgar Yukt Bharat.

(Aseervatham Achary, a former civil servant, is presently National Coordinator for Digital Library, Library and Documentation, BJP)

Views are personal and do not represent the stand of this publication.