What Is an Internship?
An internship is a fixed-duration, supervised work arrangement where a student or recent graduate gains practical exposure to a profession, typically for a stipend rather than a full salary. Learning is the point, not productive output, and that distinction is what separates it from regular employment under Indian compliance rules.
India has no dedicated internship law. That surprises most business owners. The Apprentices Act, 1961 covers apprenticeships (mandatory government registration, minimum stipend rules, applicability to employers with 30+ workers), but internships sit in a grey zone. Most SME owners run programmes based on college tie-ups or simply a phone call from an IHM coordinator in the last week of April.
How Do Internships Work in India?
Across 30,000+ Attendo clients, the pattern we see is a spike in intern onboarding between April and May. Colleges send students, the owner agrees to a stipend, and the intern shows up with a letter from their training coordinator. Stipend ranges vary widely by industry.
| Industry | Monthly Stipend Range |
|---|---|
| Restaurant / Food Service | Rs.3,000 to Rs.8,000 |
| Retail / FMCG | Rs.5,000 to Rs.12,000 |
| Manufacturing | Rs.5,000 to Rs.10,000 |
| Healthcare | Rs.5,000 to Rs.15,000 |
| Hospitality / Hotels | Rs.2,500 to Rs.12,000 |
| Marketing / Media | Rs.10,000 to Rs.20,000 |
| IT / Tech | Rs.15,000 to Rs.25,000 |
AICTE mandates internships for technical courses (B.Tech, MBA, diploma programmes) at four to six weeks per semester. The PM Internship Scheme (Budget 2024-25) offers Rs.5,000 per month, a Rs.6,000 one-time grant, and runs for 12 months for candidates aged 21 to 24. Duration has no single standard: industry norms range from 1 to 6 months.
What Does an Internship Look Like in Practice?
A catering company in Tirupur takes six IHM interns every summer for industrial training. The May 2026 batch receives Rs.7,500 per month each. One intern works only 19 days in June (personal leave, no prior approval), so the owner prorates.
| Detail | Amount |
|---|---|
| Monthly stipend | Rs.7,500 |
| Working days in June | 26 |
| Days attended | 19 |
| Prorated stipend | Rs.4,850 (approx.) |
| PF deduction | Nil (curriculum-mandated student intern) |
| ESIC deduction | Nil |
| Net payout | Rs.4,850 |
The owner tracked attendance in a shared Excel file with a third tab labelled “Interns” that nobody updated after week two. After moving to payroll software with a separate “Intern” category, attendance runs through a mobile app and stipends process in a distinct batch.
Why Do Internships Matter for Indian Businesses?
The compliance angle trips up more owners than you’d expect. Here is what matters in practice:
PF and ESIC: If the intern is a current student and the training is part of their curriculum, PF and ESIC do not apply. If the intern is not enrolled in any course or starts doing regular employee work, the arrangement can be reclassified, which means backdated contributions.
POSH Act, 2013: Section 2(f) explicitly covers trainees and interns. Every business with ten or more employees must have an Internal Complaints Committee, and interns fall under its protection.
Stipend taxation: Taxable if it compensates for work output; exempt under Section 10(16) if treated as a scholarship or grant. Most SME intern stipends fall below the Rs.2,50,000 threshold.
Internships also serve as a low-risk hiring pipeline. A Tirupur textile manufacturer or a restaurant hiring new staff can evaluate candidates over eight weeks before making a full-time offer.
How Does Attendo (formerly Petpooja Payroll) Handle Interns?
At Petpooja, we’ve noticed that businesses setting up a separate “Intern” category avoid the most common PF and ESIC confusion. Attendo lets you create custom employee types with their own pay rules, so intern stipends process separately from regular payroll runs. Attendance works through biometric, face recognition, or a geo-tagged mobile app, useful for managing temporary staff across outlets.
Frequently Asked Questions
No. Apprenticeships fall under the Apprentices Act, 1961, which mandates a minimum stipend, government registration, and applies to establishments with 30 or more workers. Internships have no dedicated statute, no registration requirement, and no mandated minimum stipend.
It depends on the intern’s status. If they are a current student on curriculum-mandated training, PF and ESIC do not apply. Once the intern is not enrolled in any course or performs regular staff duties, the arrangement risks reclassification with backdated contributions.
Most SME intern stipends fall below the Rs.2,50,000 annual threshold, so the practical answer for a three-month summer stint is usually no. A stipend is taxable if it compensates for productive work; Section 10(16) of the Income Tax Act exempts stipends classified as scholarships or grants. Check with your CA for the correct treatment.
AICTE prescribes 4 to 6 weeks per semester for technical courses. Industry practice ranges from 1 to 6 months. The PM Internship Scheme runs for 12 months. Duration typically aligns with the college’s training calendar or the business’s project cycle.
Legally, yes, for voluntary internships where no statute mandates payment. The Apprentices Act and PM Internship Scheme both require stipends for their respective programmes. That said, unpaid internships are getting harder to fill; candidates in Tirupur, Indore, and even tier-3 cities now expect at least Rs.3,000 to Rs.5,000 per month, and frankly, offering nothing makes your brand look bad to placement cells.
