You cannot assign to a list like xs[i] = value, unless the list already is initialized with at least i+1 elements (because the first index is 0). Instead, use xs.append(value) to add elements to the end of the list. (Though you could use the assignment notation if you were using a dictionary instead of a list.)

Creating an empty list:

>>> xs = [None] * 10
>>> xs
[None, None, None, None, None, None, None, None, None, None]

Assigning a value to an existing element of the above list:

>>> xs[1] = 5
>>> xs
[None, 5, None, None, None, None, None, None, None, None]

Keep in mind that something like xs[15] = 5 would still fail, as our list has only 10 elements.

range(x) creates a list from [0, 1, 2, ... x-1]

# 2.X only. Use list(range(10)) in 3.X.
>>> xs = range(10)
>>> xs
[0, 1, 2, 3, 4, 5, 6, 7, 8, 9]

Using a function to create a list:

>>> def display():
...     xs = []
...     for i in range(9): # This is just to tell you how to create a list.
...         xs.append(i)
...     return xs
... 
>>> print display()
[0, 1, 2, 3, 4, 5, 6, 7, 8]

List comprehension (Using the squares because for range you don't need to do all this, you can just return range(0,9) ):

>>> def display():
...     return [x**2 for x in range(9)]
... 
>>> print display()
[0, 1, 4, 9, 16, 25, 36, 49, 64]

Because a list is not resized by index lookups, you either need to pre-allocate a list size (which is what you did), or append to the list. Since the index you're attempting to write to does not exists in the first place, you get an Index out of range error.

def product(a,b):
    c=[]
    for i in range(len(a)):
        c.append(a[i]*b[i])
    return c

a=[1,2,3]
b=[2,4,5]
print(product(a,b))
[2, 8, 15]

Or, in much simpler terms.

def product(a,b):
    return [a[i]*b[i] for i in range(len(a))]

a=[1,2,3]
b=[2,4,5]
print(product(a,b))
[2, 8, 15]