Fish farming in open water cages is a recently introduced technology in India. The successful cage farming demonstrations in the open sea led to its popularisation in the coastal waters in the country. The economic viability of cage fish farming was analysed based on primary data collected from 60 farm units in Kerala state in the South west coast of India. Asian seabass, pearlspot, tilpaia, redsnappers and caranx were the major species cultured in the study area. The average size of a farm unit was 115 m3 with a stocking density of 32 fishes per m3. The gross revenue and average cost were ` 8584 and ` 4331 respectively per m3 of farm area. The Benefit–cost ratio and operating ratios were 2.02 and 0.42 respectively indicating cage farming as an economically viable farming technology. Resource use efficiency analysis indicated that stocking density and quantity of feed used had positive and significant influence on fish production and economic efficiency could be improved by increasing the use of these inputs.