I use data on firm observations from 1989 to 2005. For these years, there is information on all the firm variables used in the production function estimation as well as quantities and sales values of products of firms. There are data on 5 _,_ 850 manufacturing firms with 45 _,_ 835 firm year observations. The firms belong to 13 major industry groups.<sup>19</sup> Industries are classified according to the National Industrial Classification (NIC 2008). There is a one-to-one correspondence between the NIC and ISIC (The United Nations International Standard Industrial Classification).

The data set is appropriate for this study because it tracks firm performance over time for a variety of variables. In addition to the usual variables on revenue and inputs, which are relevant for productivity estimation, it also contains data on variables relating to firm activity in international markets (exports and imports) as well as on investment in knowledge (R & D spending). It also has product-level data on all products produced by the firm which allows for the construction of firm specific price deflators.

All input variables have been deflated to 1989 _−_ 90 levels using deflators from the 1993 _−_ 94 price series. Energy, Wages and Capital Stock were deflated by the power and fuel, wholesale price index and machinery deflators respectively. I created input price deflators for each industry by passing output deflators through the input-output matrix for each industry. Summary statistics for the variables used in the production function are reported in Table 3.

The measure of quantity I use is the firm sales revenue deflated by the firm specific price deflator. The import intensity term is the total expenditure on intermediate inputs divided by the expenditure on domestic inputs. All firm output and input variables (quantity, labor, capital, energy, material inputs and import intensity) are expressed as natural logarithms while the export and R & D indicator are discrete variables. There are 544 export entrants where an export entrant is as defined in subsection 4.2. The data set contains information on the number of units sold as well as total sales value of the product for each product of the firm. This gives us unit values of the product. There are data on about 150 _,_ 000 product year observations. Among the firms, 1 _,_ 658 are single-product firms throughout the period while the remaining firms sell two or more products at least atsome point in the period. Products are assigned a product code based on the product classification developed by CMIE Prowess. Each product code is matched to a five-digit industry.

I follow Eslava et al. (2004), Eslava et al. (2010), Ornaghi (2008) and construct firm specific price deflators as Tornqvist indices of the weighted average growth of prices of all products produced by the firm (see appendix A.3). I report the summary statistics for price deflators constructed from the firm data as well as industry deflators from the price series data from the Government of India Statistics Division in the last two rows of Table 3.

> 19I exclude minor industries such as printing, coke and petroleum products etc., where the number of firm-year observations is too few to allow for estimation of the production function parameters.

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