Micro businesses and startups in India, the very segment that stands to gain most from government hiring incentives of up to Rs 3,000 per employee per month, show alarmingly low awareness of the scheme, according to a new report by TeamLease Services, showing a critical risk to the success of the country’s flagship job creation programme.
Only 5.4 per cent of startups, micro and small businesses surveyed were aware of the Pradhan Mantri Viksit Bharat Rozgar Yojana (PM-VBRY), despite the scheme being explicitly designed to support smaller employers through wage-linked incentives and workforce formalisation, the TeamLease Services report said.
The finding stands in sharp contrast to awareness levels among large enterprises, which stood at 83.1 per cent, underscoring what the report calls a “size paradox” in India’s employment policy landscape, where those most in need of support are the least informed.
India's unemployment rate was around 4.8 per cent in December 2025, an increase from November's 4.7 per cent, with rural joblessness stable at 3.9 per cent but urban rates rising to 6.7 per cent, according to the Periodic Labour Force Survey (PLFS) by MoSPI.
An International Labour Organisation (ILO) report revealed that the unemployment rate of youth is higher than for adults. It has been rising over the past several decades, from 5.6 per cent in 2000 to 6.2 per cent in 2012 and then increasing threefold, to nearly 18 per cent in 2018 and reaching around 15.1 per cent in 2020.
After criticising the ILO finding, the central government also questioned a Citigroup report, which stated that India “will struggle to create sufficient employment opportunities” even with a 7 per cent economic growth rate. The Union Ministry of Labour and Employment said that the report fails to consider the positive trends and comprehensive data from official sources.
Generating Employment For The Jobless
PM-VBRY, earlier known as the Employment Linked Incentive scheme, aims to generate 3.5 crore jobs between August 2025 and July 2027 and is backed by a government allocation of Rs 99,446 crore. Under its employer support mechanism, firms can receive between Rs 1,000 and Rs 3,000 per additional employee per month for two years, extended to four years for manufacturing companies, subject to minimum hiring thresholds.
TeamLease Services surveyed 1,251 employers across 23 industries between September and November 2025 to assess awareness, motivations and likely participation in the scheme. The results point to a structural awareness gap that could leave billions of rupees in incentives unclaimed while muting the scheme’s impact on job creation.
“Only 5.4 per cent of startups, micro and small businesses demonstrated awareness of PM-VBRY,” the report said, adding that extrapolated to India’s estimated 6.3 crore MSMEs, fewer than 35 lakh firms may know of a programme crafted to support them.
Notably, the micro and small firms collectively employ about 11 crore workers and account for nearly 30 per cent of India’s gross domestic product, making them central to any large-scale employment push.
Informing The Unaware
The report warned that if awareness remains skewed towards large corporations, PM-VBRY risks subsidising companies that would have hired anyway, while excluding smaller firms that face sharper cash-flow constraints and higher perceived risks in expanding their workforce.
At the headline level, overall awareness of PM-VBRY appears strong, with 81 per cent of employers either fully or somewhat aware of the scheme. However, TeamLease Services said this aggregate figure masks deep disparities by organisation size.
While 61 per cent of medium-sized enterprises showed awareness, startups and micro firms were almost entirely disconnected from the programme. This gap, the report noted, shows limited HR capacity, weaker government interface and lower access to professional advisory networks among smaller businesses.
Large companies benefit from dedicated compliance teams, regular interactions with labour authorities and memberships of industry bodies that actively disseminate policy information, the report said. Smaller firms, by contrast, often lack the bandwidth to track schemes amid day-to-day survival pressures.
The awareness shortfall is particularly striking given the financial design of PM-VBRY. For a micro enterprise hiring five workers, the cumulative incentive could reach Rs 3.6 lakh over two years, a sum that can materially alter hiring decisions in labour-intensive sectors.
Yet financial incentives were not the main motivator even among employers who were aware of the scheme. Only 18.6 per cent cited direct hiring subsidies as their primary reason for participating, the survey found. Instead, 51.8 per cent pointed to support for skill development as the dominant attraction, followed by job retention incentives at 39.7 per cent and workforce formalisation benefits at 29.9 per cent.
The central government offers several schemes to support MSMEs, including women entrepreneurs in the sector. However, Tide India's Bharat Women Aspiration Index (BWAI) 2024 revealed that about 95 per cent of Indian women are unaware of existing government financial schemes or initiatives to leverage for their business. The report mentioned that this indicates women are turning to the informal sector for access to credit.
About 52 per cent of women entrepreneurs have access to financial credit, indicating that one in two entrepreneurs has access to finance, while 47 per cent said they face challenges, it stated. It added that a striking 86 per cent of women entrepreneurs either rarely or never participate in any business networks, significantly hampering their business expansion, access to funding, and mentorship opportunities
A Nuanced Employer Mindset
TeamLease Services said this hierarchy reveals a more nuanced employer mindset, where long-term productivity and workforce stability outweigh short-term cash support. However, it also suggests that messaging around PM-VBRY may be missing its mark among micro firms, for whom immediate cost relief could be decisive.
“Scale matters,” the report said, noting that Rs 3,000 per month is negligible for large corporations but meaningful for small employers. The low emphasis on financial incentives likely shows a survey sample skewed towards larger firms and a limited understanding of the cumulative value of the subsidy among smaller ones.
About 56 per cent of surveyed employers said they intended to grow headcount in the second half of FY26, yet only 60.4 per cent of this growth-oriented cohort were aware of PM-VBRY. The report estimated that if 40 per cent of growth-intent employers nationwide remain unaware and each hires an average of five to ten additional workers, between 12 million and 24 million potential jobs could be created without availing scheme benefits.
That would translate into Rs 21,600 crore to Rs 43,200 crore in unclaimed incentives over two years.
For micro and startup employers, the missed opportunity is sharper still. Many operate on thin margins, rely on informal labour arrangements and hesitate to expand due to compliance costs and attrition risks. PM-VBRY’s design, which links incentives to sustained employment over at least six months, could help offset these risks, the report said.
Yet awareness remains weakest precisely where such reassurance is needed most. Interestingly, experts told BW Businessworld in 2024 that excluding MSMEs from the central government’s internship scheme is a missed opportunity for both the sector and young job aspirants. They noted that by not including them in the internship scheme, India risks stunting the growth of this vital sector.
Also Read: Excluding MSMEs From Centre's Internship Scheme A Missed Opportunity: Experts
The central government introduced a scheme for internship opportunities for the youth in the top 500 companies of India as part of the union budget 2024-25. Sitharaman said this scheme will be implemented over the next five years and is expected to benefit 100 million youth. Interns will receive a monthly stipend of Rs 5,000 and a one-time assistance of Rs 6,000, a cost that companies would bear via corporate social responsibility.
A Mega Divide
Industry-wise data further illustrate the divide. Fast-moving consumer goods companies showed the highest awareness at 72.2 per cent, reflecting their established HR systems and frequent interaction with EPFO processes. Educational services, which employ millions, had the lowest awareness at 33.3 per cent.
The report also highlighted functional gaps within organisations. Compensation and benefits teams showed the highest awareness at 71.7 per cent, while HR generalists lagged at 44.4 per cent, raising concerns about strategic ownership of the scheme within firms.
For micro businesses, these internal distinctions often do not exist, as hiring, payroll and compliance are handled by owners themselves or external accountants, further complicating outreach. TeamLease Services said closing the awareness chasm among startups and micro firms must be treated as an urgent policy priority if PM-VBRY is to meet its ambitious job creation target.
The report called for targeted communication through MSME development institutes, Udyam registration channels and GST portals, along with simplified, mobile-first messaging in regional languages. It also suggested activating intermediaries such as chartered accountants and business correspondents to spread awareness at the grassroots.
Without such interventions, the scheme risks reinforcing existing inequalities in India’s labour market, the report warned. “Opportunity without awareness is opportunity wasted,” TeamLease Services said, adding that the remaining window for job creation under PM-VBRY will determine whether it becomes a transformative success or a missed chance in India’s employment journey.
Meanwhile, according to a study by the Administrative Staff College of India (ASCI) with financial assistance from Niti Aayog, India’s MSMEs are being held back by fragmented government support systems, overlapping schemes and weak coordination between ministries.
The report, Achieving Efficiencies in MSME Sector through Convergence of Schemes, argued that without convergence across schemes, ministries and states, public spending risks dilution, duplication and limited on-ground impact. “These schemes are well-intentioned, but fragmentation across ministries and departments has led to inefficiencies, duplication of efforts and limited outreach,” the report noted. |
