SPATIAL HETEROGENEITY IN CARBON EMISSIONS INTENSITY AND THE ROLE OF FOREIGN DIRECT INVESTMENT: EVIDENCE FROM INDIA’S ORGANIZED SECTOR MANUFACTURING PLANTS

The nexus between foreign direct investment (FDI) inflows and carbon dioxide (CO[Formula: see text] emissions intensity is studied using plant-level data from the Annual Survey of Industries for the years 2014–2015 to 2018–2019. We estimate the CO 2 emissions intensity for individual manufacturing plants during the analysis period, considering the fuel mix and the share of renewable energy sources (RES) used in different regions’ power supply. The econometric results show that, after controlling for industry affiliation, the CO 2 emissions intensity of manufacturing plants with FDI is significantly lower than that of domestic plants. Further, there is a positive spillover effect, i.e., plants with FDI and having relatively low CO 2 emissions intensity tend to reduce the CO 2 emissions intensity of the domestic plants in the same industry and region.