It is being increasingly recognized that a majority of the countries in the thalassemia-belt need a cost-effective screening program as the first step towards control of thalassemia. Although the naked eye single tube red cell osmotic fragility test (NESTROFT) has been considered to be a very effective screening tool for beta-thalassemia trait, assessment of its diagnostic performance has been affected with the reference test- and verification-bias. Here, we set out to provide estimates of sensitivity and specificity of NESTROFT corrected for these potential biases. We conducted a cross-sectional diagnostic test evaluation study using data from 1563 subjects from Central India with a high prevalence of beta-thalassemia. We used latent class modelling after ensuring its validity to account for the reference test bias and global sensitivity analysis to control the verification bias. We also compared the results of latent class modelling with those of five discriminant indexes. We observed that across a range of cut-offs for the mean corpuscular volume (MCV) and the hemoglobin A2 (HbA2) concentration the average sensitivity and specificity of NESTROFT obtained from latent class modelling was 99.8 and 83.7%, respectively. These estimates were comparable to those characterizing the diagnostic performance of HbA2, which is considered by many as the reference test to detect beta-thalassemia. After correction for the verification bias these estimates were 93.4 and 97.2%, respectively. Combined with the inexpensive and quick disposition of NESTROFT, these results strongly support its candidature as a screening tool-especially in the resource-poor and high-prevalence settings.