ABSTRACT
Adopting the framework of RBV, this study empirically examined the technological determinants of TE during FY 2000/2001 to FY 2006/2007 in the context of IMI. The most important findings of the study is that technological capability and knowledge base built through alternative channels, such as FDI, import of disembodied technology, research and development, use of more capital intensive techniques of production and import of intermediate goods have efficiency enhancing effects on the firms in IMI. Thus, given the current policy of Indian Government for 100% equity participation through FDI, no restrictions on import of intermediate goods and technology and fiscal concessions on R&D expenditure, the firms desiring to expand their base in this industry (nationally or internationally) must built their efficiency advantage through these channels of technological capability building. To improve their efficiency levels, the companies may also focus on building product differentiation advantage through higher advertising and marketing expenditure, enlargement in their size and financing expansion and other needs through higher use of networth than interest bearing debt. Improving firm-level efficiency with the help of technological and other firm-specific factors brought out by the study would not only help creating internationally competitive IMI capable of withstanding the influx of imports, but also generate higher growth in its domestic production and exports. These in turn may lead to increased share of IMI in global production and exports.
