The local economy of Kavaratti is largely driven by government services, as it is the administrative capital of Lakshadweep. Outside of the public sector, the economy relies on traditional industries:
* **Fisheries:** Tuna fishing is a major commercial activity, with much of the catch processed into dried tuna (masmeen) or canned. * **Agriculture & Coir:** Coconut cultivation forms the backbone of local agriculture. The extraction of coir (coconut fiber) and copra production are significant cottage industries. * **Tourism:** Regulated tourism provides employment in hospitality, water sports, and local transport. There are no major corporate headquarters or large-scale business districts; commerce consists mainly of small retail shops, cooperative societies, and local vendors.