While India's remarkable performance in IT software and service
exports may be inspirational for other Indian industries and more so for
other countries in the south, the moot question is how has India fared in
terms of harnessing this technology for enhancing manufacturing
productivity. This paper is an attempt at addressing this issue by analyzing
an unpublished data set on the investment in computers and software at
the industry level made available by the CSO. The study finds that low
level of IT investment intensity in the manufacturing sector
notwithstanding, IT investment does have a positive and significant
impact on both partial and total factor productivity. The findings of the
paper suggest that in a context wherein the policy makers are concerned
with low levels of growth in manufacturing output and productivity, policy
measures and institutional interventions towards promoting IT diffusion
in the manufacturing sector is likely to give rich dividends.