The extension of the ESI scheme was not progressing at the desired pace. In 2010 the threshold coverage level was reduced from 20 to 10 employees through an amendment to the Act. Moreover, in sparsely populated areas many establishments could not be covered even with the threshold of 10 employees.

In addition, the ESI scheme had never been implemented in the states of Arunachal Pradesh, Manipur, Mizoram and the Union Territory of Andaman Nicobar.

Only 815 centres were covered in 393 districts and construction site workers even in the implemented areas were not covered due to practical difficulties. A large chunk of the unorganized sector workforce was also still without social security coverage.

It was decided therefore to:
 

1. Implement the scheme in the states of Arunachal Pradesh, Manipur, Mizoram and the Union Territory of Andaman Nicobar.
    
2. Extend the scheme operating in the 393 districts to the country as a whole.
    
3. Reduce the coverage threshold from 10 to 5 employees.
    
4. Extend coverage to construction site workers.
    
5. Extend coverage to certain sections of workers in the unorganized sectors on a pilot basis.