MSME Ministry Upgrades NSIC to Schedule ‘A’ Category CPSE

Source: PIB

Subject: Economy

Context: The Ministry of MSME has upgraded the National Small Industries Corporation (NSIC) from a Schedule ‘B’ to a Schedule ‘A’ Central Public Sector Enterprise (CPSE), recognizing its consistent Excellent performance.

About MSME Ministry Upgrades NSIC to Schedule ‘A’ Category CPSE:

What are Category CPSE?

• Central Public Sector Enterprises (CPSEs) are companies where the direct holding of the Central Government is 51% or more.

• To streamline management and salary structures, the Department of Public Enterprises (DPE) classifies these entities into four distinct schedules: A, B, C, and D.

Governing Act & Authority:

• Governing Act: Most CPSEs are incorporated under the Companies Act, 2013 (or previous versions like the 1956 Act) or created as Statutory Corporations through specific Acts of Parliament.

• Administrative Authority: The Department of Public Enterprises (DPE), under the Ministry of Finance, is the nodal agency for categorization and policy formulation.

History:

• The categorization system was introduced in 1965 following recommendations from the ‘Committee on Top Posts.’

• It was designed to create a hierarchy based on the size of operations and strategic importance, primarily to determine the pay scales and seniority of Board-level executives (CMD, Directors).

The Four Categories:

• Schedule A: The highest tier, comprising large-sized enterprises with significant national and strategic importance.

• Schedule B: Mid-sized enterprises.

• Schedule C: Smaller enterprises or those with niche operations.

• Schedule D: The smallest tier, often used for initial categorization of new CPSEs.

Key Features of Categorization:

• Quantitative Parameters: Evaluation is based on the last five years of performance in terms of investment, capital employed, net sales, profit before tax, and number of employees.

• Qualitative Factors: Factors include national importance, complexity of problems, level of technology, and prospects for expansion.

• Governance Structure: Higher schedules (like ‘A’) typically allow for a more robust board structure and higher-ranking executive positions.

• Salary Links: The schedule directly determines the Industrial Dearness Allowance (IDA) pay scales for the Chairman, Managing Director, and other Board members.

Significance of the Upgrade:

• Moving to Schedule ‘A’ grants the organization greater financial and operational powers, reducing the need for frequent ministerial approvals for large projects.

• reflects the entity’s comparative advantage and potential to become a global player.