MC EXCLUSIVE Govt mulls tech adoption and AI deployment as new benchmarks for PSU Ratna categorisation

A disproportionate share of the world’s top AI researchers are of Chinese origin.

The government is weighing a revamp of the Maharatna--Navratna--Miniratna framework for Central Public Sector Enterprises (CPSEs), with discussions at the Cabinet Secretary level exploring whether technology adoption and artificial intelligence (AI) deployment should be introduced as new benchmarks for PSU classification, a senior government source said.

So far, categorisation of Ratna companies has been based largely on financial parameters such as net worth, turnover, and profitability, alongside a few strategic considerations. The review now under way seeks to update these old norms to reflect current business realities and global governance practices.

“Criteria fixed for turnover, net profit and capex were laid down some time ago. Costs have changed, the nature of business has changed. To an extent, we can edit the framework, keeping with the needs of time. New parameters, including levels of technology deployment, are under discussion,” a senior government official told Moneycontrol.

Digital readiness

Sources said the government is examining whether digital transformation, measurable outcomes from technology deployment, and AI integration can be factored into PSU performance assessment. “Tech adoption and AI can be inbuilt as a criteria standard. The government is trying to understand which CPSEs are most advanced and which lag in tech adoption. For some sectors, adoption will have to be minimal, but deployment must lead to positive net benefits,” the source noted.

The move reflects a recognition that competitiveness in global markets today is not determined by balance sheet size alone, but also by innovation and technology readiness.

Balancing sectoral differences

The proposal is still in the early stages, with ministries set to be consulted in due course. Sources acknowledged the challenge of applying a common framework across PSUs, which operate in widely different sectors – from high-tech energy like ONGC, NTPC, BHEL and telecom companies like BSNL to more traditional industries like SAIL.

“Adoption of AI and new technologies has to be sector sensitive. Deployment should enhance efficiency and profitability, without creating unnecessary cost burdens,” the source said.

PSU governance

If implemented, this would mark the first time that PSU governance standards explicitly embed digital and AI readiness into Ratna categorisation. Such a shift would align India’s CPSEs with evolving global corporate governance norms and investor expectations, while also encouraging state-owned firms to accelerate digital transformation.

Officials cautioned, however, that revising the framework is a “very big exercise”, as raising benchmarks too sharply could disqualify many existing Ratna companies. “We are trying to interpret many ifs and buts. If benchmarks are multiplied with an index to adjust for inflation, several PSUs may not qualify under existing categories. The government needs to be cautious, as such changes have implications in the open market and for global competitiveness,” the source added.

Why is the government revising Ratna criteria now?

The existing benchmarks for turnover, net profit and capex were set years ago. With inflation, shifting costs and changing business models, many PSUs no longer fit neatly into the old framework. Updating the criteria will better reflect current realities.

What are the criteria for Miniratna-I vs Miniratna-II status?

To become a Miniratna-I, CPSEs must have made profits for three consecutive years, have a pre-tax profit of ₹30 crore or more in at least one of those years, and have positive net worth. To become a Miniratna-II, CPSEs must have profit for three successive years and a positive net worth. They should have no defaults on government dues or guarantees and not rely on budgetary support.

What are the eligibility criteria for Navratna status?

To be considered for Navratna status, a CPSE must already be Miniratna-I, have attained “Excellent” or “Very Good” MoU (Memorandum of Understanding) ratings in at least three out of the last five years, and score at least 60 in a composite evaluation based on six performance-indicators

What qualifies a PSU for Maharatna status?

Some of the criteria include average annual turnover of over Rs 25,000 crore over past three years, average annual net worth of over Rs 15,000 crore over the same period and average net profit after tax of over Rs 5,000 crore in the past three years, along with a significant global presence.