In the twenty-first century, one of the prime concerns for the policymakers is to mitigate the consequences of Global climate change. Pollution is one of the key contributors to climate change. In an attempt to control pollution and waste, energy efficiency gain through technological advancement and carbon tax are proposed, in the literature. These policy prescriptions are in discussion, on how they are efficient enough to attain energy-saving and energy efficiency goals? In this regard, we present the case of heterogeneous firms in the manufacturing sector of the Indian economy using data from the CMIE Prowess IQ. Our empirical findings suggest that technological progress and FDI have helped firms to achieve energy efficiency.
Keywords: Energy Efficiency. Technology. Productivity Dilemma.