Energy Intensity of Indian Manufacturing Firms

Abstract

The energy intensity of Indian manufacturing has declined signifi cantly since 1992. Between 1992–93 and 2007–08, it fell by about 50 per cent. However, it seems, there is scope for further substantial decline in energy intensity, since industrial energy consumption data across states indicate signifi cant inter-plant variation in the energy intensity of energy-intensive industries. The paper examines the factors that infl uence energy intensity in Indian industries. The results of the analysis indicate that the post-1992 decline in energy intensity of Indian manufacturing is attributable mostly to an improvement in energy use efficiency of energy-intensive industries, which in turn may be traced in part to hikes in the real price of energy paid by manufacturing fi rms. The results also show a signifi cant impact of technological change on energy intensity and presence of energy efficiency spillover effects from foreign fi rms to local firms.

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