In response to a severe balance of payments crisis in 1991, India turned to the international Monetary Fund (IMF) for assistance. Financial assistance from the IMF was conditional on a structural adjustment program, of which liberalizing trade was a key component. As a result, over a short period of time, India drastically reduced tariffs and narrowed the dispersion in tariffs across sectors. Since the reform was rapid, comprehensive, and externally imposed, it is reasonable to assume that the changes in the level of protectionism were unrelated to firm ‐ and industry ‐ level productivity. India’s 1991 economic liberalization therefore provides an excellent setting to analyze the impact of trade reforms on productivity because it sidesteps the endogenous nature of trade policies that typically present major challenges to empirical studies. For instance, governments may reduce tariffs only after domestic firms have improved productivity, 3 which would result in a spurious relationship between trade and productivity. As we argue below, this is unlikely to be a concern in India’s case.