As the admission season gathers pace and thousands of students prepare to move to Bengaluru—India’s startup capital—the city’s internship ecosystem is coming under renewed scrutiny. From product development and research to marketing campaigns and client-facing projects, students today are contributing to workstreams that increasingly resemble entry-level jobs. Yet many continue to do so with little or no financial compensation.
The debate has become particularly relevant at a time when Bengaluru’s rising cost of living is making unpaid opportunities inaccessible for many students. Simultaneously, policy interventions such as Karnataka’s GCC Policy 2024–2029, which includes stipend reimbursement support, and the PM Internship Scheme, which aims to create one crore internship opportunities nationwide, have brought the issue into sharper focus.
The central question remains – are internships fulfilling their role as educational bridges to employment, or are they quietly normalising underpayment in the name of industry exposure?
Where does learning end and free labour begin?
The answer, according to higher education leaders, lies in understanding the nature of the opportunity itself. For Dr Phani Kumar Pullela, Director – Corporate & Alumni Relations (CAR), RV University, unpaid internships still have relevance in certain contexts, particularly within early-stage startups where learning opportunities often outweigh financial rewards. He argues that startups frequently seek young talent directly from campuses because they bring fresh perspectives and adaptability, unlike experienced professionals who may arrive with preconceived approaches. In such environments, especially during a student’s first immersion into industry, exposure to multiple functions and domains can provide invaluable learning.However, he believes the justification for unpaid internships weakens considerably once organisations enter operational or revenue-generating stages. In his view, companies that are already generating business value should compensate interns, while unpaid opportunities should largely be limited to research-oriented or exploratory environments where learning remains the primary objective.
Srinivas Reddy, Associate Professor and Chairperson – Placements and Corporate Engagement at TAPMI, also acknowledges the financial burden unpaid internships can place on students, particularly those enrolled in MBA programmes. Yet he cautions against viewing every unpaid internship through the lens of exploitation, noting that several startup environments provide broader exposure, hands-on experience, and entrepreneurial insights that students may not gain elsewhere.
Not everyone agrees that learning alone justifies the absence of compensation. Pranav Padode, CEO of SANKALP, the parent organisation of IFIM Institutions and Jagdish Sheth School of Management (JAGSoM), takes a firmer position. He argues that the moment an intern begins contributing to measurable business outcomes, “industry exposure” can no longer be used as a justification for unpaid work. According to him, learning should never become a discount code for free labour.
At JAGSoM, this philosophy has translated into a structured paid internship model. Through its Industry Internship Program (IIP), the institution ensures paid internships for the entire second-year cohort, with stipends ranging between ₹25,000 and ₹1 lakh per month. Padode believes that genuine industry exposure must be accompanied by clear learning outcomes, mentorship, and fair financial treatment if institutions are serious about preparing students for the workforce.
The rise of the Internship-to-Employment pipeline
Another concern emerging across industries is whether internships are gradually replacing traditional entry-level hiring. For Dr Pullela, the distinction between internships and entry-level jobs has naturally narrowed over time. He views internships as a modern form of apprenticeship—an ethical mechanism that allows employers and students to evaluate one another before entering into long-term employment relationships. Rather than seeing internships as substitutes for jobs, he believes they are increasingly becoming the preferred route through which organisations identify and recruit future talent.
This trend is particularly visible through the growing prominence of Pre-Placement Offers (PPOs). According to Srinivas Reddy, many organisations now rely heavily on internships to assess candidates before extending full-time roles. He observes that students may be willing to bear the short-term costs of an unpaid internship if it leads to strong full-time opportunities that exceed prevailing industry compensation benchmarks.
Padode, however, warns against conflating internships with employment. While he agrees that internships can serve as an effective talent pipeline, he emphasises that they should complement, not replace, entry-level hiring. The ownership, accountability, and expectations associated with a full-time role are fundamentally different from those attached to an internship.
From the employer’s perspective, he sees paid internships as a lower-risk method of assessing a candidate’s skills, attitude, cultural fit, and learning potential before making permanent hiring decisions. For students, meanwhile, paid internships offer dignity, financial support, and meaningful industry experience without creating additional economic barriers.
What makes an internship fair?
As policymakers and institutions attempt to strike the right balance between employability and equity, there is a growing consensus that internships require stronger frameworks that protect learning outcomes while ensuring fairness.
Dr Pullela believes the solution lies in combining institutional policies with individual student agency. Universities, he says, can establish guidelines that define the kinds of organisations eligible to recruit interns and the conditions under which internships are offered. At the same time, students must retain the freedom to choose opportunities that align with their personal aspirations and career goals.
He points out that some students intentionally turn down paid opportunities in favour of startup experiences that offer greater entrepreneurial exposure or long-term growth potential. In innovation-driven ecosystems like Bengaluru, he believes students are often mature enough to differentiate between exploitative arrangements and genuine learning opportunities.
Nevertheless, he suggests that universities may eventually choose not to formally endorse unpaid internships through official placement channels. Instead, startups could be given opportunities to engage directly with students while institutions encourage them to provide at least a minimum fellowship or financial support.
Padode advocates a more structured approach. At JAGSoM, internships are treated as formal practice-based learning interventions rather than informal work experiences. Every internship is expected to include a defined learning plan, faculty or industry mentorship, clear deliverables, feedback mechanisms, reasonable working hours, and minimum financial support. He further argues that stipends should be linked to factors such as city living costs, role complexity, and internship duration.
Importantly, he believes internships should ultimately reduce, not increase, the barriers students face when transitioning into the workforce. A fair internship, he argues, should help students understand the realities of work while simultaneously creating pathways to pre-placement offers and long-term career opportunities.
Exposure alone isn’t enough
As Bengaluru continues to attract students, startups, and global employers alike, the debate surrounding unpaid internships reflects a larger challenge confronting India’s education-to-employment ecosystem.
While opinions differ on whether unpaid internships should continue to exist, there is broad agreement that internships must remain educational, structured, transparent, and outcome-driven. The challenge for institutions, employers, and policymakers is ensuring that valuable learning experiences do not become accessible only to those who can afford to work for free.
In a labour market increasingly defined by skills, agility, and experience, internships will continue to play a crucial role. The real question is not whether internships should exist, but whether they can evolve into opportunities that are both educationally meaningful and economically fair.
