Abstract:
In this paper an effort was made to evaluate the level of efficiency of the firms that
belong to the selected manufacturing sub-sectors in India for the period 1999-2000 to 2013-
2014 using Stochastic Frontier Analysis. Subsequently, the microeconomic and
macroeconomic determinants of efficiency were analysed applying Panel Censored Tobit
Regression Model. The study revealed that Electrical Equipment sub-sector was found to be
the most efficient sector followed by the sub-sectors Auto Parts and Equipment,
Pharmaceutical and Biotechnology, Chemicals, Textile, Food products and Steel
respectively. The study also showed that leverage, size of the firm, age of the firm, openness
of the firm (microeconomic) and inflation (macroeconomic) made notable contribution
towards changing the level of efficiency of manufacturing firms during the study period.
However, their contributions were not the same in all sub-sectors under study
