Apprentice hiring under the Apprentices Act: an employer guide

Apprentice hiring in India is governed by the Apprentices Act, 1961 and the Apprenticeship Rules, 1992. Establishments with 30 or more workers are generally required to engage apprentices within a band of 2.5% to 15% of their total workforce, including contract workers, pay at least the prescribed minimum stipend and register each contract on the national apprenticeship portal. Under the National Apprenticeship Promotion Scheme (NAPS), the government shares part of the stipend, and apprentices are trainees rather than employees.

This guide covers who must engage apprentices, designated and optional trades, calculating your band, stipend and NAPS support, the portal process, how apprentices differ from employees for PF and other laws, and conversion to employment. For other early-career routes, see campus hiring for freshers and paying interns a stipend.

Who has to engage apprentices?

The obligation turns on the total strength of the establishment, which the rules count to include contractual staff, not just employees on your rolls.

Total workforce of the establishment	Position (as commonly read)
Fewer than 4	Not covered
4 to 29	May engage apprentices on an optional basis
30 or more	Must engage apprentices within the band of 2.5% to 15% of total strength

The band applies per establishment, and the Act's definition of "establishment" can be read to include multiple units of one employer, so check how your locations are grouped. The thresholds and percentages come from the 2014 amendment to the Act and later changes to the rules. They have been revised before, so confirm the current figures on the Apprenticeship India portal before you plan.

What is the difference between designated and optional trades?

Apprentices are engaged in trades, and the Act recognises two kinds.

Point	Designated trade	Optional trade
Who defines it	The government, by notification	The employer, within the rules
Curriculum	Prescribed syllabus, often aligned to ITI trades	Designed by the employer, including basic training and on-the-job training
Duration	As prescribed for the trade	Commonly 6 to 36 months
Typical roles	Fitter, electrician, machinist, welder, COPA	Retail associate, customer service, warehouse operations, banking operations
Assessment	Trade test and certificate as prescribed	Assessment by the employer or a sector body, as the rules provide

Within these, the categories of apprentice include trade apprentices, graduate apprentices, technician apprentices and technician (vocational) apprentices. Graduate and technician apprentices are administered under the National Apprenticeship Training Scheme through the Ministry of Education's regional boards, while trade and optional trade apprentices fall under NAPS through the Ministry of Skill Development and Entrepreneurship. Many service businesses use optional trades, because they can design a programme around their own roles.

How do you calculate the apprenticeship band?

Take the total strength of the establishment, including contract workers, and apply 2.5% for the minimum and 15% for the maximum.

Worked example

A Pune auto-components plant has 1,150 employees on its rolls and 250 contract workers.

• Total strength: 1,150 + 250 = 1,400.
• Minimum apprentices: 1,400 × 2.5% = 35.
• Maximum apprentices: 1,400 × 15% = 210.

The plant currently has 20 apprentices, so it is short by 35 − 20 = 15. It should plan at least 15 more, and can go up to 210 if it wants to build a talent pipeline. Rounding conventions and whether specific categories (such as fresher apprentices) carry their own sub-limits are set by the rules, so check the current text before you report your numbers.

What stipend do apprentices get?

The employer must pay at least the minimum stipend prescribed under the Apprenticeship Rules, which varies with the apprentice's qualification. The 2019 amendment set monthly minimums ranging from ₹5,000 for school pass-outs from class 5 to class 9 up to ₹9,000 for graduates, with intermediate rates for class 10, class 12, certificate and diploma holders. Revisions to these amounts have been discussed since, so check the current schedule on the portal before you fix stipends. You can always pay more than the minimum, and most employers do for graduates in competitive cities.

Point	Rule
Minimum stipend	As prescribed for the apprentice's qualification
Payment	Monthly, by bank transfer to the apprentice's account
Deductions	Only as the rules allow; apprentices are not covered by the Code on Wages payment chapter
Leave	As prescribed by the rules for apprentices
Working hours	As the rules provide, broadly aligned to the establishment's hours for workers

How does NAPS reimbursement work?

Under NAPS, the government shares 25% of the prescribed stipend, subject to a maximum of ₹1,500 per month per apprentice. Under the current version of the scheme (NAPS-2), the government's share is generally paid directly to the apprentice's bank account through direct benefit transfer, after the employer pays its share and the claim is processed on the portal. Scheme details change from time to time, so confirm the current share, cap and process on the portal.

Worked example: cost of a graduate apprentice batch

A Bengaluru bank engages 40 graduate apprentices in an optional trade, with a stipend of ₹12,000 a month. Assume the prescribed minimum for graduates is ₹9,000 and the NAPS share is 25% of the prescribed stipend, capped at ₹1,500.

Item	Working	Amount
Government share per apprentice	25% × ₹9,000 = ₹2,250, capped	₹1,500 a month
Employer share per apprentice	₹12,000 − ₹1,500	₹10,500 a month
Total stipend, 12 months	40 × ₹12,000 × 12	₹57,60,000
Government support, 12 months	40 × ₹1,500 × 12	₹7,20,000
Employer cost, 12 months	₹57,60,000 − ₹7,20,000	₹50,40,000

Note that the government share is calculated on the prescribed stipend, not on the higher amount you choose to pay.

How does the apprenticeship portal process work?

1. Register the establishment on the apprenticeship portal with your PAN, GST or other identifiers and location details.
2. Choose trades. Select designated trades or create optional trade courses for your roles.
3. Post opportunities with location, seats, qualification and stipend.
4. Select candidates, who also register on the portal, through your own interview process.
5. Generate and register the contract of apprenticeship on the portal within the time the rules allow. An unregistered contract weakens your position on both compliance and reimbursement.
6. Run the training. Basic training (where required), on-the-job training, attendance and periodic progress records.
7. Pay the stipend monthly and submit claims so the government share can be released.
8. Assess and certify at the end of the period, as the trade requires.

Keep a single apprentice register: name, portal registration number, trade, contract dates, stipend, attendance and assessment outcome. Inspectors and NAPS claims both rely on it.

Is an apprentice an employee for PF and other laws?

Generally, no. The Apprentices Act treats an apprentice as a trainee and not a worker, and provides that labour laws apply to apprentices only to the extent the Act says. In practice:

Law	Usual position for an apprentice under the Apprentices Act
EPF under the Code on Social Security	Excluded from the definition of "employee"; no PF contributions
ESI	Generally excluded; check the current position for your category
Gratuity and statutory bonus	Not applicable, as the apprentice is not an employee
Code on Wages payment provisions	Do not apply; the stipend follows the Apprentices Act and rules
Injury	The employer is liable to pay compensation for injury during training, as the Act provides
Income tax	Treatment of stipend can vary; confirm with your tax adviser

This holds only for apprentices properly engaged under the Act. A "trainee" or "apprentice" engaged outside the Act, with no registered contract, is likely to be treated as an employee for PF, ESI and wages. Our guide to EPF covers who must be enrolled.

How are apprentices different from interns, trainees and fixed-term employees?

Point	Apprentice	Intern	Trainee on rolls	Fixed-term employee
Governing law	Apprentices Act	Contract; no specific statute	Labour Codes, as an employee	Labour Codes
Contract	Registered on the portal	Internship letter	Appointment letter	Fixed-term contract
Pay	Minimum stipend	Stipend by policy	Wages, subject to minimum wages	Wages on par with permanent staff
PF and ESI	Generally no	Usually no	Yes, if eligible	Yes, if eligible
Government support	NAPS share	None	None	None
Counts towards band	Yes	No	No	No

See fixed-term employment under the Labour Codes for that model.

Can apprentices be converted to permanent employees?

Yes, but there is no obligation to offer a job at the end of the apprenticeship unless the contract says so. If the contract contains a condition that the apprentice will serve you for a period after training, the Act makes that enforceable on both sides, so use it deliberately. When you do convert:

• Issue a fresh offer and appointment letter; the apprenticeship contract ends.
• Enrol the person for PF and ESI from the date of employment, generating or linking their UAN.
• Decide whether to shorten probation in recognition of the training; many employers do.
• Remember that apprenticeship is generally not service as an employee, so it does not count towards gratuity eligibility.

Common mistakes

• Counting only employees on rolls when working out the band, and leaving out contract workers.
• Calling people "apprentices" without registering contracts on the portal.
• Deducting PF from a properly engaged apprentice's stipend.
• Paying below the prescribed minimum stipend after a revision.
• Using apprentices to fill regular production roles with no training plan.
• Assuming apprenticeship service counts towards gratuity on conversion.

FAQs

Is apprentice hiring mandatory in India? For establishments with 30 or more workers, engaging apprentices within the band of 2.5% to 15% of total strength is generally mandatory. Smaller establishments with 4 to 29 workers can engage apprentices optionally.

Is PF deducted from an apprentice's stipend? Generally no. Apprentices engaged under the Apprentices Act are excluded from the definition of employee for PF. Trainees engaged outside the Act may be covered.

How much does the government pay under NAPS? NAPS shares 25% of the prescribed stipend, up to ₹1,500 a month per apprentice, generally paid directly to the apprentice. Check the portal for the current scheme terms.

What is an optional trade apprenticeship? A trade designed by the employer for its own roles, with basic and on-the-job training, usually lasting 6 to 36 months, registered on the apprenticeship portal.

Do we have to give apprentices a job after training? No, unless the contract of apprenticeship includes a condition requiring it.

How NeevHR helps

NeevHR recruitment runs selection with interview panels and structured feedback, and onboarding collects documents and bank details through a guided joining journey. In employee records, employment types are configurable, so apprentices can be held as their own type with custom fields for portal registration and contract dates, and converted with an effective-dated change. To see it with your own hiring flow, book a demo.

This article provides general information for educational purposes. Statutory rules, thresholds, rates and filing requirements may change; verify with the relevant authority or a qualified professional. Last reviewed: 27 Oct 2026.