Reclassification of CPSEs | 28 Oct 2025

Source: ET

Why in News?

The Government is planning to revise the classification and performance assessment criteria for Central Public Sector Enterprises (CPSEs) by introducing two new ‘Ratna’ categories in addition to the existing Maharatna, Navratna, and Miniratna statuses.

  • The Department of Public Enterprises under the Ministry of Heavy Industries and Public Enterprises grants Maharatna, Navratna, and Miniratna status to CPSEs based on their financial performance. 

What are the Key Aspects of the CPSEs’ Reclassification?

  • New Evaluation Parameters: New evaluation parameters under discussion include corporate governance, succession planning and leadership development, capital expenditure, dividend payout, sustainable business practices, and alignment with Vision 2047.
  • Re-evaluation Committee: A 10-member committee led by Cabinet Secretary T.V. Somanathan is conducting the re-evaluation, with its report due before the Union Budget 2026–27.
  • Objective of Revision: It aims to modernize the public sector and align it with India’s national economic strategy by developing next-gen CPSEs capable of global competitiveness. 
    • It focuses on accountability, performance-driven governance, efficiency, and strategic resource alignment toward sectors vital for India’s future economic security.
  • Current Ratna Categories: India currently has 14 Maharatna, 26 Navratna, and 74 Miniratna firms. The status enables financial and operational independence in capital spending, joint ventures, and investments.

What are CPSEs? 

  • About: A Central Public Sector Enterprise (CPSE) is a company, majority-owned and controlled by the Government of India, with at least 51% of its shares held by the Central Government, either directly or indirectly through other CPSEs. 
    • This definition also extends to include the subsidiary companies of such enterprises.
  • Formation: It is an entity that was either incorporated under Indian company law (like the Companies Act, 2013) or established by a specific Act of Parliament. 
  • Current Classification of CPSEs:

Frequently Asked Questions (FAQs)

1. What is a CPSE?

A Central Public Sector Enterprise (CPSE) is a company with ≥51% government ownership, incorporated under company law or an Act of Parliament, including its subsidiaries.

2. Who is re-evaluating CPSE classification?

A 10-member committee headed by Cabinet Secretary T.V. Somanathan is reviewing CPSE classification and will submit its report before the Union Budget 2026–27.

3. How does the proposed new 'Ratna' differentiation differ from the existing one?

Unlike the existing categories that depend on financial size and turnover, the new tiers will recognize CPSEs based on their strategic importance to national economic goals in critical sectors.

UPSC Civil Services Examination, Previous Year Question (PYQ) 

Q. With reference to the Indian Renewable Energy Development Agency Limited (IREDA), which of the following statements is/are correct? (2015)

 1. It is a Public Limited Government Company.

 2. It is a Non-Banking Financial Company.

 Select the correct answer using the code given below:

(a) 1 only 

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Ans: (c)