Environmental Impact of India's Trade Liberalization

India's liberalization program of 1991 reduced trade barriers and removed investment restrictions across industries. Using industry level dataset aggregated across all manufacturing industries, we compare the pre- and post-liberalization periods to examine if India's domestic production and exports showed a greater increase in dirty industries relative to cleaner ones. We also examine whether there has been a greater inflow of FDI into pollution-intensive sectors in the post-liberalization period. Our findings indicate that exports and FDI grew in the more polluting sectors relative to the less polluting sectors in the post-liberalization period