The islands of Andaman have immense development potential but the natural resources have not been tapped properly. The development has been insignificant but the population has increased alarmingly. Evergreen rainforests make Andaman a 'gold mine' of timber. Tropical fruits are found on the hilly parts of the islands in abundance while the fishery potential here, offers industrial possibilities.

Agriculture is an important source of income for the rural people. Paddy is the main crop here, while coconut and areca nut are the main cash crops of the Nicobar Islands. Field crops namely pulses, oilseeds and vegetables and spices like pepper, cloves, nutmeg and cinnamon are also cultivated. Rubber, red oil, palm and cashew are grown on a limited scale on these islands.

The major industries in the region include Poly Vinyl Chloride (PVC) conduit pipes and fittings, paints and varnishes, fiberglass, soft drinks and beverages, and steel furniture. The industrial scenario is changing rapidly with the initiatives taken by the government.