Object Recognition for classification, is it being used in industry?
As far as I am aware, object recognition is not extensively used in industry yet. Google's image search, for instance, is based on exploiting the text on the web pages rather than the images themselves. I have seen several start-up companies that market prototypes based on object recognition, but these products are either prototypes or not widely used.

Regarding state-of-the-art techniques, you should take a look to recent literature on deep learning and deep neural networks applied to object recognition, along with more specific techniques like convolutional networks.