Reduction in Carbon Emissions Intensity among Indian Manufacturing Firms and Its Impact on Their Export Competitiveness, 2009-2013

Between 2002-03 and 2012-13, energy consumption intensity and carbon dioxide (CO2) emissions intensity of Indian manufacturing declined by about 30 percent. During the last 10 to 15 years, Indian manufacturing has achieved, at the aggregate level, an average rate of reduction in energy intensity and CO2 emissions intensity in the range of 3 to 3.5 percent per annum. During 2009-10 to 2012-13, a majority of India’s organized-sector manufacturing plants achieved a rate of reduction in CO2 emissions intensity of about 10 percent per year or more, which is obviously a significant achievement. Did this plan or strategy of Indian manufacturing firms aimed at reducing energy consumption and carbon emissions from manufacturing activity cause any loss of competitiveness, particularly export competitiveness? This is the main question investigated in the paper. A related question is what factors determined the interplant and inter-firm variations in the extent of reduction achieved in carbon emissions. The analysis is carried out with the help of unit-level data of Annual Survey of Industries (ASI) for the years 2009-10 to 2012-13 and a panel dataset of about four thousand manufacturing companies drawn from the Ace Equity database covering the period 2009-10 to 2013-14. The analysis is done in two steps. First, an analysis is undertaken of the inter-plant and inter-firm variation in the extent of reduction achieved in CO2 emissions intensity during the period under study.