Linder theory implies that the more similar the demand structure of two countries is, the more intensive would be the potential trade between these two countries. This study examines Linder hypothesis for bilateral trade of India. Linder effects describe the impact of GDP per capita income differences of India and its trading partners on bilateral trade. Empirical estimations suggest that there is no such Linder effect for bilateral trade of India. However, this study also examines the effect of some other factors such as Population of trading partner, distance and trade agreement between India and its trading partner. The study concludes that distance and trade agreement have no such significant impact on bilateral trade but there is significant impact of Population of partner country on bilateral trade of India.

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Keywords: Linder Theory, GDP, Per Capita Income, Bilateral Trade, Linder Hypothesis.