A study of changing patterns of energy consumption and energy efficiency in the Indian manufacturing sector

In the present economic scenario, the key concerns in policy making in India are: how to achieve higher energy efficiency in the key sectors and how to reduce the vulnerability of the economy to external shocks. In this paper, an attempt is made to study the changing pattern of commercial energy consumption in the manufacturing sector, which is the largest user of commercial energy and to identify the alternative energy saving processes through technological upgradation. For this purpose, we have adopted Divisia index decomposition method, which decomposes the aggregate energy intensity index into structural intensity index and the energy intensity index. The findings of the paper suggest that while several sub-sectors have shown increasing trends of technical efficiency, there is still a lot of scope for energy saving potential in the industrial sub-sectors. Further, it is found out that the change in the aggregate energy intensity index has not been influenced much by the structural effects. Instead, major segment of the change in aggregate intensity index is explained by the reduced energy intensity index