Segmentation of Public Sector Undertakings (PSUs) in India

🧭 Why Segmentation?

India has over 250 CPSEs (Central Public Sector Enterprises), and they vary not just by sector, but by their functions, financial strength, legal status, and strategic importance.
So for administrative clarity and policy focus, the Government of India segments them into categories which are explained as follows:

Based on Administrative Structure

This is the most basic classification: Who controls and runs them directly?

(i) Departmental Enterprises

• These are not separate legal entities.
• They function within government departments and are funded through the annual budget.

✅ Examples:

• Indian Railways (Ministry of Railways)
• Postal Services (Ministry of Communications)
• Department of Telecom (DoT) – handles telecom infra inside the BSNL framework

These are highly regulated and have limited autonomy.

(ii) Non-Departmental Enterprises (Statutory & Corporate PSUs)

These are independent legal entities, established under:

• Companies Act, or
• Special Parliamentary Acts

They function with greater autonomy and can raise capital from the market.

These are further split into:

a. Manufacturing PSUs

Engaged in industrial production—steel, energy, machinery.

📌 Examples:

• BHEL – heavy electrical equipment
• SAIL – steel production
• HAL – aerospace & defense

b. Non-Manufacturing PSUs

Operate in services – banking, insurance, telecom, aviation, etc.

📌 Examples:

• SBI – banking
• LIC – life insurance
• Air India – aviation (before disinvestment)

Based on Financial Autonomy & Performance

This is the most popular and UPSC-relevant classification—based on the PSU’s financial health, operational efficiency, and strategic importance.

Let’s go from top to bottom:

i. Maharatna PSUs

“Crown jewels” of India’s public sector

• Granted maximum autonomy in investments – up to ₹5,000 crore or 15% of net worth per project.
• Meant to compete globally and act as strategic national champions.

✅ Eligibility Conditions:

• Navratna status
• Listed on Indian stock exchange with minimum SEBI-prescribed public shareholding
• 3-year averages:
  • Turnover > ₹25,000 crore
  • Net worth > ₹15,000 crore
  • Net profit > ₹5,000 crore
• Significant global presence or international operations

📌 10 Maharatna PSUs (as of now):

1. BHEL
2. BPCL
3. CIL
4. HPCL
5. GAIL
6. IOCL
7. NTPC
8. ONGC
9. Power Grid Corp.
10. SAIL

ii. Navratna PSUs

“Mid-tier leaders” with moderate autonomy for expansion and joint ventures.

✅ Eligibility:

• Must be Miniratna Category-I and Schedule ‘A’ CPSE
• 3 “Excellent/Very Good” MoUs in last 5 years
• Composite score ≥ 60/100 across 6 parameters (like profit ratios, manpower cost, earnings per share, etc.)

📌 14 Navratna CPSEs:

Includes BEL, NALCO, HPCL, etc.

💰 Investment Autonomy:

• Up to ₹1,000 crore OR
• 15% of net worth per project (max ₹1,000 crore/year)

iii. Miniratna CPSEs

“Emerging or regionally significant” players with limited autonomy
There are 71 Miniratnas, divided into two categories:

🟢 Category I

• Profitable for last 3 years
• OR Profit ≥ ₹30 crore in one of the last 3 years
• 💰 Can invest up to ₹500 crore or net worth, whichever is lower

📌 Examples: RailTel, IRCTC

🔵 Category II

• Profitable for last 3 years
• Positive net worth throughout
• 💰 Can invest up to ₹300 crore or 50% of net worth, whichever is lower

Based on Strategic Importance (Post-2021 PSU Policy)

A major shift came in 2021, when GoI introduced the New Public Sector Enterprise Policy.

It classifies sectors as:

i. Strategic Sectors – Govt to retain at least 1 PSU

These are considered critical for national security, sovereignty, and economic resilience:

1. Atomic Energy, Space, Defense
2. Transport & Telecom
3. Power, Petroleum, Coal, Minerals
4. Banking, Insurance, Financial Services

📌 Others in these sectors can be privatized, but one PSU will be retained.

ii. Non-Strategic Sectors

• All other sectors fall here.
• These are open for full privatization, disinvestment, or strategic sale.

Example: Air India, a non-strategic PSU, was sold to Tata Group in 2022.

Who Governs These PSUs?

All Central PSUs are overseen by the: Department of Public Enterprises (DPE) under the Ministry of Heavy Industries & Public Enterprises

• It maintains the official list of Maharatna, Navratna, and Miniratna CPSEs.
• It sets the criteria for financial powers, corporate governance, and performance evaluation.

✅ Summary Chart: PSU Segmentation in India

Basis	Type	Examples	Key Feature
Control	Dept. vs. Non-Dept. Enterprises	Railways vs. BHEL	Govt-run vs. Incorporated bodies
Function	Manufacturing vs Non-Manufacturing	SAIL vs SBI	Production vs Services
Performance/Autonomy	Maharatna, Navratna, Miniratna	ONGC, BEL, IRCTC	Investment autonomy & global role
Strategic Role (Post-2021)	Strategic vs Non-Strategic	HAL vs Air India	Retention vs. Disinvestment potential

🧠 Conclusion

Segmentation of PSUs helps the government:

• Target reforms
• Ensure accountability
• Prioritize disinvestment and strategic control

From playing a historic role in nation-building, PSUs are now being steered toward a leaner, performance-based, and globally competitive model.