Purpose of Research: Public sector undertakings (PSUs) have been playing a pivotal role in accelerating the pace of industrialization and achieving social and economic goals. Capital structure decision of the firm and the impact of determinants in capital structure decision is an important issue in the recent era for measuring the performance of any firm. Determinant of leverage can influence the selection of capital structure of the business. Hence, in this study we try to find out the relationship between determinant of capital structure and leverage in capital structure decision making process of the PSUs in India. This study has been conducted to identify important factors along with the measurement of their level of significant capital structure theory.

Methodology: Capital structure of any organisation plays an important role in financial decision making process. In this section with the help of panel regression analysis I build a regression equation and exhibit the linkage between leverage and its determinant.

Major Results: In this paper our objective is to find out what type of capital structure theory actually followed by the Indian Public Sector Undertakings in the present era. Most of the determinants in the long-run follow the trade-off theory

Implications:   From the analysis it is observed that most of the determinants follow trade off theory that means PSUs follow the trade-off theory of capital structure in the present situation in India.