Cymbopogon martinii, commonly known as palmarosa, is an essential oil-bearing crop cultivated by the farmers for production of oil used in perfumery, cosmetics and flavour industries. The study on the economics of palmarosa cultivation has shown that the major portion of operational cost was shared by human labour, distillation charges and preparation of nursery. Total variable cost was found to be  47926 per hectare per year. The gross returns were found to be  124000 per hectare per year. The net returns over variable cost were   76074 per hectare. The benefit–cost ratio was found to be 2.59 indicating a higher profit to the farmers. The independent variables like human labour, planting material and distillation charges were positive indicating significant impact on the returns from the crop. There is need for effective market intelligence system to ensure remunerative price of the produce to the farmers.