I'd created a new entity with some animation and noticed that the graphics were very slow in rendering and the whole game seemed to behave sluggishly. After some investigation, i found that the culprit was my custom spawn egg texture that was 600*600 pixels in size. I discovered this because i noticed that the performance issue went away when i switched to holding a different item in my hand.

When i reduced the texture size to 64*64, the issue went away. 

Perhaps other devs are wise enough to use a smaller texture for their spawn eggs but it would be good to let others know of the size limitation, so they don't think something else is causing the performance issues, i guess.