The paper attempted to see the relationship between trade liberalization and poverty andinequality in India. For trade liberalization, volume of trade as ratio of GDP, head countratio for poverty and Gini-coefficient has been used for income inequality. The grangercausality technique is applied to time series data for the years 1970-2009. The resultsindicate that trade has no significant effect on poverty and poverty has no effect ontrade. However, trade has increased inequality in the short-run and inequality affectedthe trade in the long-run negatively. It partially contradicts the prediction of the Stolper-Samuelson theorem.