Innovative Pathways For Sustainable Growth In Industry: TFP, CO2 Emissions, And The Future Of India’s Development.

Abstract

This study explores the role of innovation and Total Factor Productivity (TFP) in driving economic growth with environmental challenges, especially CO2 emissions, in the major industrial sectors of India from 1991 to 2022. The relationship between TFP, energy inputs, and economic output is examined through a Cobb-Douglas production function. The findings highlight innovation, especially in energy efficiency and sustainable technologies, as a key driver of productivity gains and decoupling economic growth from CO2 emissions. The paper identifies phases of technological adoption, such as Industry 4.0 and renewable energy integration, that have significantly contributed to TFP growth and resource optimization. It also emphasizes that the periods of high TFP growth are matched with lower energy intensity and emissions, thus opening a window of opportunity for sustainable technologies to be aligned with economic growth and environmental stewardship.

On the other hand, the transition to cleaner technologies, particularly after 2015, presented early-stage productivity challenges in terms of higher costs and regulatory compliance. These early-stage investments were costly but laid a foundation for long-term sustainable growth. The research also studies economic stability through the COVID-19 pandemic and underlined that creativity and digital technology were the major building blocks of the recovery and the new status of being adapt to unforeseen turns in the future. The study addresses the persistent requirement for innovations and investments in cleaner technologies, renewable energy, and resource efficiency to mitigate environmental hazards due to industrial growth. Hence, the research concludes that the paths of sustainable development and innovation are inseparable, with policy implications in the provision of funding to research and development, in carrying out sustainable practices and constructing an enabling environment for green technologies being the main focus.