Abstract
This article studies the effects of the economic reforms on the Indian manufacturing industries. Data Envelopment Analysis was used to estimate technical and scale efficiency changes after the 1991 reform initiatives. The estimates suggest, however, that the efficiency of manufacturing industries declined during the post-reform era. The variations are different across industries, and the findings demonstrate the importance of technological progress for improving manufacturing efficiency and productivity in India.
Highlights
The Indian manufacturing sector has followed diverse pathways to industrial development since independence in 1947
Such an evaluation carries with it the suggestion that industry groups are judged against each other on a common basis of output-oriented efficiency
It is assumed that all industry groups are operating with respect to a common production frontier for manufacturing in India
Summary
The Indian manufacturing sector has followed diverse pathways to industrial development since independence in 1947. Over the last three decades, the sector has undergone significant changes through extensive reforms. Along with China, is fast emerging as a global manufacturing hub. It was ranked second by the Global Manufacturing Competitiveness Index, an index developed by Deloitte Touche Tohmatsu (2010:15) in collaboration with the US Council on Competitiveness. The industrial policy resolution of 1980 emphasised the need to improve productivity in existing units and in order to make them globally competitive. The focus was mainly on five areas: foreign investment, entry procedures, technology, monopolies and restrictive trade practices and the public sector
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