Scope for Reducing 2 Emissions of Indian Manufacturing: Its Likely Impact on Export Competitiveness.

This paper explores how reductions in carbon dioxide (₂) emissions of Indian manufacturing would impact the export competitiveness of Indian manufacturing firms, by estimating production functions of alternate specifications using data on manufacturing companies for 2007-2008. The results indicate substantial scope for reduction in ₂ emissions through factor substitution and reduction in technical inefficiency. The analysis presented in the paper indicates that a reasonable carbon tax of US$ 4-15 per tonne of ₂would cause costs in industrial companies to increase, on average, by 0.36%-1.33% and the consequent loss of exports because of the carbon tax is likely to be small. [ABSTRACT FROM AUTHOR]