India’s Union cabinet on Tuesday approved two major schemes with an outlay of Rs1 trillion ($11.7 billion) each: one to generate jobs and the other to scale up research and development (R&D) in key sectors.

The Employment Linked Incentive (ELI) Scheme and the Research Development and Innovation (RDI) Scheme will together support formal job creation and boost private-sector-led innovation in strategic and emerging areas, the government said.

The ELI Scheme, announced in the Union Budget 2024–25, aims to create over 3.5 crore (35 million) jobs in two years, with particular focus on youth entering the workforce and employers in the manufacturing sector. Of the 3.5 crore targeted jobs, around 1.92 crore are expected to be first-time employees.

Under the scheme, first-time employees registered with the Employees’ Provident Fund Organisation (EPFO) will get a one-time incentive equivalent to one month’s wage, capped at Rs15,000.

The payment will be made in two instalments—after six months of service and again after 12 months, subject to the employee completing a financial literacy module.

To promote saving habits, part of the incentive will be held in a fixed deposit account.

The second part of the scheme will provide monthly incentives to employers hiring additional workers, especially in manufacturing.

Employers will get Rs1,000 to Rs3,000 per employee per month for two years, depending on the wage bracket, for each new hire retained for at least six months.

In the case of manufacturing firms, the incentives will extend to a third and fourth year.

Enterprises with fewer than 50 employees must add at least two workers to qualify, while larger firms must add five.

The incentives apply to workers earning up to Rs1 lakh per month and will cover jobs created between 1 August 2025, and 31 July 2027.

Payments to employees will be made through the Aadhaar Bridge Payment System. Incentives for employers will be credited directly into PAN-linked bank accounts. The government expects this part of the scheme to generate 26 million new jobs.

Boost for innovation ecosystem

The cabinet also approved the RDI Scheme to strengthen India’s innovation ecosystem by easing access to long-term, low-cost funding for private-sector R&D.

The $11.7 billion corpus will be used to fund or refinance projects in strategic and sunrise sectors such as semiconductors, space, clean energy, quantum technologies, artificial intelligence, and biotechnology, with support offered as long-term loans at low or zero interest, and in some cases, equity funding.

The scheme will back projects at higher levels of technology readiness, help companies acquire critical technologies, and contribute to Deep-Tech Funds of Funds that support early-stage ventures.

The goal is to crowd in private investment in areas of strategic and economic importance and improve the commercial viability of innovation.

The Anusandhan National Research Foundation (ANRF) will anchor the scheme, with its governing board chaired by the Prime Minister and its executive council responsible for guidelines and project selection.

An Empowered Group of Secretaries led by the cabinet secretary will review implementation, approve changes, and oversee fund managers. The Department of Science and Technology will be the nodal implementation agency.

Funding will flow through a two-tier structure. A special purpose fund will be set up within ANRF to house the corpus. From there, second-level fund managers will deploy the capital through loans, equity, and fund-of-funds structures. Startups may receive equity support, while most others will benefit from concessional loans.

Both schemes are part of the government’s broader push to formalize the workforce, equip youth with stable jobs, and strengthen India’s global competitiveness in innovation.

While ELI focuses on immediate employment outcomes, RDI aims to build long-term capacity in sectors aligned with national priorities.

Together, they are expected to contribute to the government’s vision of a developed India by 2047.