A Stochastic Frontier Production Function Approach to Indian Textile Industry

This study examined the efficiency of Indian textile industry during 1991/92 - 2009 /10. The maximum likelihood estimates for productive efficiency showed that in the single output case, parameters of capital input were positive and statistically significant. Hence capital was the main input factor for these industries as its value was higher than labor. The coefficients were statistically significant though their signs differed. The estimated levels of output considerably differed from their potential levels due to factors which are within the control of the industries. The summation of the elasticities of factors of production of 1.8419 indicated increasing returns- to -scale. The industry recorded an average technical efficiency of 0.941.The average technical inefficiency was negligible.