The small scale industry (SSI) is an important component of Indian economy and a majority of SSI units tend to exist in geographical clusters. Energy efficiency is crucial for the survival and growth of energy intensive SSI clusters, not only to improve their competitiveness through cost reduction but also to minimize adverse environmental impacts. However, this is easier said than done due to the presence of a variety of barriers. The identification of relevant barriers and their appropriate prioritization in such clusters is a prerequisite to effectively tackle them. This paper identifies relevant barriers to energy efficiency and their dimensions in SSI clusters. Further, the barriers are prioritized based on the perceptions and experiences of entrepreneurs, the main stakeholders of SSIs, using the analytic hierarchy process (AHP). The field data from two energy intensive clusters of foundry and brick and tile in Karnataka (a state in India) reveal that the prior-itization remained the same despite differences in the relative weights of barrier groups. The financial and economic barrier (FEB) and behavioural and personal barrier (BPB) have emerged as the top two impediments to energy efficiency improvements. (c) 2005 Elsevier Ltd. All rights reserved.