The changing production structure of the Indian economy and the march from a backward,
primary sector dependent economy to a more vibrant industrial economy have a significant
impact on the structure and commodity composition of its foreign trade.
The paper attempts to measure the factor content of India’s foreign trade during the reform
period with the objective to find out whether the factor intensity of trade has been in tune with
comparative advantage of the country as determined from its endowment of factors or there are
some other factors which have also affected its foreign trade. As a labour abundant country,
India enjoys natural comparative advantage in labour intensive commodities and the study
confirms it by revealing India’s exports to the rest of the world to be more labour intensive than
its import replacements. However, India’s exports to the OECD, the largest trading partner, are
found to be more capital intensive than imports during later years of the reform period,
producing an instance of Leontief Paradox. The Paradox has also been witnessed in cases of
India’s trade with the EU, North America and Japan.