Lakshadweep is a no-industry area. However,an Industrial potential survey conducted by the industrial Development Bank of India has revealed that the area has scope for Industrial development. On the request of the Administration Agencies like Small Industries Service Institute, Trichur, Regional Research Laboratory, Thiruvananthapuram, Industrial and Technical Consultency Organisation, Kochi etc have prepared detailed industrial potentiality reports for Lakshadweep and suggested various kinds of ventures having developmental potential based on resources available and demand for implementation. The expert group set up by the planning commission on prospects of small scale Industries in Andaman & Nicobar and Lakshadweep group of Islands has also studied the problems of the Islands and mentioned certained suggestion and remedial measures in their report for the development of Small Scale Industries Sector.

Coconut husk is the main raw material available for the development of the cottage Industries in Lakshadweep. Considering the scope for coir and coir based industries,coir demonstration cum training centres were established during 1974-75 to train the local women folk in production of thinner variety coir yarn which has good market not only in Islands but also in mainland. Under the coir sector there are seven coir Fiber factories,six coir production-cum-demonstration centres and three fiber curling units functioning in different islands except Minicoy and Bitra Island with 316 workers. Amoung these seven coir Fiber factories, the department has introduced second shift of work in three factories at Kavaratti,Amini and Kadmath during the last plan period. The Second shift of work in the remaining of expansion work. The above coir units under the department has produced 380 MT coir fiber,67 MT curled rope and 42 MT coir yarn during 1997-98. In addition to the above unit the department has also established one coir spinners industrial copertive society at Amini during May 1997 under coir sector.

Out of the two Handicaraft Training Centres established at Kavaratti and Kalpeni in 1973 and 1979 respectively, one is continuing to impart training to local candidates in making seashell-toys, coconutshells-craft, wood carving etc. After training they are provided with tools and equipments on 50% subsidy to establish their own production units. The hosiery factory established in 1967 at Kalpeni produces vests,tee shirts,etc. Presently the factory provides regular employment to 17 persons and job work employment to 13 persons. During 1997-98 the factory has produced 11817 different size baniyans in addtion to allied products.