The Union Budget 2025-26 should continue to prioritise employment creation to harness India’s demographic dividend and propel economic growth, apex business chamber CII said on Sunday.

It highlighted that the Union Budget for FY25 had outlined a series of initiatives to boost employment generation, including the Employment Linked Incentive Scheme. The forthcoming Budget could announce further measures to boost employment generation, the CII statement said.

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India is now the world’s most populous country, boasting 1.45 billion citizens. With a median age of just 29 years, India is also a young country and is set to add 133 million people to its working-age population by 2050. Mass-scale employment generation is important to engage this young population productively, and to drive inclusive growth, CII said.

The business chamber has proposed an integrated National Employment Policy, which could subsume under its ambit, the slew of employment-generating schemes currently in works by various Ministries.

In addition, the unified policy could also build on the single integrated employment portal — National Career Service (NCS) — wherein all the data can flow into this from various Ministries and State Portals. In this context, it is important to look at the development of the Universal Labour Information Management System (ULIMS) under NCS. This would provide information about employment opportunities and projections; job classification; skills demand; and training opportunities aligned with the projections.

As part of its wish list for the Budget, CII has proposed a new section in lieu of section 80JJAA to encourage new employment. The new provision should continue as a Chapter VIA deduction from Gross Total Income which is available even if the taxpayer opts for a concessional tax regime. It can be made available to any taxpayer who carries on business or profession and is liable to tax audit. The deduction can be granted for the first three years of new employment with reference to the salary paid in the respective tax year but is subject to a ceiling of Rs 1 lakh per month, the statement said.

CII has also sought targeted support for employment-intensive sectors such as construction, tourism, textiles, and low-skilled manufacturing. To boost exports from labour-intensive manufacturing sectors, which will lead to employment generation, tariff structures, and support through programmes like the Production /Employment Linked Schemes, and the Free Trade Agreements (FTAs) that India is entering, need to be synced, it added.

Increasing women’s participation in the workforce, which currently is low, can further boost the Indian economy. New initiatives, including the construction of dormitories using CSR funds, the formalization of sectors like the care economy, establishment of government-supported creches in industrial clusters, could be taken to Increase female labour force participation, CII said.

According to CII, the government could consider, launching an internship programme in government offices in rural areas, for college-educated youth. This initiative would create short-term employment opportunities in government offices while bridging the gap between education and professional skills.

Rolling out Labour Codes while ensuring Social Security coverage to the Gig and Platform workers would further strengthen the employment landscape, the statement added.

CII has also urged the Government to consider setting up an International Mobility Authority under the Ministry of External Affairs. This authority could facilitate government-to-government collaborations to help Indian youth tap overseas employment opportunities. The authority could also work with the Ministry of Skill Development and Entrepreneurship to help develop skill development programmes aligned with global opportunities.

CII Director General Chandrajit Banerjee said, “Coupled with higher employment, India also needs to ensure that productivity goes up. India’s Incremental Capital Output Ratio (ICOR) needs to trend down from its present level of 4.1. The Union Budget could set up an expert committee to study this in greater detail and recommend measures on the way forward.”