Industrialization plays an important role in economic development. Of which, the manufacturing andrnagro processing sub sectors role in growth is immense. Cognizant to; the government of Ethiopia hasrngiven an attention to the industry sector under the Growth and Transformation Plans to create arnfoundation for the sector to take a leading role in the economy. Industrial firms are top priority for therngovernment in developing the export sector; and the Development Bank of Ethiopia is mandated tornprovide finance. This study was conducted on 153 sample industrial firms which were funded byrnDevelopment Bank of Ethiopia. The study applied a parametric stochastic frontier approach (SFA) inrnestimating the technical efficiency of industrial firms situated in Addis Ababa & its surrounding thosernfinanced by DBE. In this study translog frontier model was specified to represent the frontier function.rnThe parameter estimates by industrial groups are obtained using Maximum-likelihood method.rnWater is critical for industries hence it can be taken as the essential input. It is also realized thatrnindustrial water use is increasing rapidly thereby requiring water management and further effortsrnshall be made. The technical efficiency of firms most of the time was analyzed using labor, capital andrnintermediate materials only; without giving due attention to the water input used in production. Thisrnimplies there is a gap in studies conducted on technical efficiency analysis in taking in to account thernwater input as a factor of production. Water input was so well thought-out in this study. The studyrnresult reveals that the estimated coefficients for the water inputs are positive across all industrialrnfirms, but its significant level differ with different industrial groups. For example in industries such asrnfood and beverages, tanning & leather industries, paper & printings, and rubber & plastics industries;rnthe estimated coefficient for the water input is positive and significant at 1 percent. Whereas inrnindustries; like chemicals and furnitureâ€™s; the coefficients for the water input is positive andrnsignificant at 5 percent. The study result reveals variations in efficiency exist among firms within thernindustrial group, indicating that there is room for improving efficiency levels if firms use the waterrninput in a more efficient manner. Common to some industrial firms would be inability to operate atrntheir optimum production capacity. The study result also reveals the aggregate mean technicalrnefficiency of operational industrial firms funded by DBE was 43.8 percent during the study period. Thernstudy findings provide evidence that water efficient technology usage in combination with otherrnvariables reinforce each others have significant effects on technical efficiency. The findings of thisrnstudy have also recommendations in that; it primarily support for decision making by firm owners,rnfunding institutions and the policy makers. Hence, national and regional policies that promote waterrnefficient technology use are likely to enhance efficient utilization of the water resources; ensurernsustainable use of the water resources and increase productivity of industrial firms.rnKeywords: Water input, stochastic frontier Approach, Industrial firms, Water efficient technology use, Technical efficiency