Dear Smriti,
First and foremost, you need to understand difference between "Offer Letter" and "Appointment Letter". Former is issued when candidate fulfils the recruitment criteria and company considers his/her selection. In most cases the latter is issued once the employee joins company. In extreme case appointment letter is issued even before employee joins the company.
You might introduce this type of clause nevertheless, please anticipate repercussions of insertion of this clause as well. Why recover just the cost of interview and selection? Why not cost of discontinuity in work as well? Latter cost is greater than former!
Introduction of this type of clause could scare away the job candidates. When a job aspirant starts searching a job, it is obvious for him/her to attend interviews at as many places as possible. Possibly he/she might get selected in 2-3 places. Therefore, the job candidates weighs options and chooses the best option. What if job candidates start declining job offer because of this clause?
Secondly, a needy candidate may accept the job offer even with this clause but then what if he/she still does not turn up? To recover the cost of interview and selection, will your company sue the job candidate? Under such cases, how many court cases you will go on fighting? By settling score with the job candidates, what image your company will cultivate in the job market?
Job candidates do not turn up even at MNCs as well. "No show" is fait accommpli that employers need to put up with. Nevertheless, what matters is brand image of the company. Higher the brand image, less the chances of "No show". Therefore, real challenge lies in how to enhance brand image of the company so that you can attract quality candidates. Failure of job candidate(s) to join your company after issue of offer letter shows that your brand image means nothing to the him/her. Rather than drawing solace from recovery of small amount owing to "No shows", please address the larger issues.
Thanks,
Dinesh Divekar