Impact of export intensity on energy intensity in manufacturing plants: Evidence from India

Several econometric studies, some undertaken for industrialised countries and some for emerging economies, have found that export participation by industrial enterprises tends to lower their energy intensity and CO2 emissions intensity. Similar studies undertaken for Indian manufacturing firms using firm-level data have also reached the same conclusion. This paper uses plant-level data for 2008-2015 to examine the impact of export intensity on the energy intensity of Indian manufacturing. The use of plant-level data has the advantage of incorporating location-specific differences into the analysis, such as the contribution of renewable energy sources (solar, wind, etc.) to the power supply in the state in which the plant is located. The paper finds a significant negative effect of export intensity on energy intensity, confirming earlier findings. Also, on a relative scale, the energy-efficiency-enhancing effect of exporting is larger for relatively more energy-intensive industries. Further, increases in the share of renewable energy in the power supply make industries more energy efficient.