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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