The present paper aims at measuring energy use efficiency in Indian cement industry and estimating the factors explaining inter-firm variations in energy use efficiency. Within the framework of production theory, data envelopment analysis has been used to measure energy use efficiency. Using firm-level data from electronic PROWESS database for the years 1989–1990 through 2006–2007, the study first estimates energy use efficiency of the firms and then compares the efficiency scores across. Empirical results suggest that there is enough scope for the Indian cement firms to reduce energy uses, though this potential for energy saving varies across firms. A second-stage regression analysis reveals that firms with larger production volume have higher energy efficiency scores and that age of the firms impacts differently on energy use efficiency obtained from two different models. Also, higher quality of labor force associates with higher energy use efficiency.