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This form of enterprise suffers from serious limitations, some of which are as follows:
  1. Departmental enterprises do not provide flexibility, which is important for the smooth functioning of business;
  2. The heads of departments or employees of such enterprises are not allowed to take independent decisions, without the approval of the ministry concerned. This leads to setback in matters where prompt decisions are necessary;
  3. These undertakings are not able to take advantage of business opportunities. The bureaucrat's extra-vigilance and conservative approval does not allow them to take risky actions;
  4. There is red tapism in daily operations and no action can be taken unless it passes through the proper channels of authority;
  5. There is a lot of political intervention through the ministry;
  6. These establishments are generally not sensitive to consumer requirements and provide inadequate services to them.

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