The present study assesses the risk and profitability of rice seed production in the Union Territory of Puducherry. The percentage analysis and linear discriminant functions were used to analyze the data. The findings of the study indicated that seed production was profitable but a risky venture. A few farmers withdrew from the seed production programme in the initial stage due to non-availability of seeds, poor rainfall, poor germination, grazing and admixture. During the final stage of production, farmers faced the risk of rejection due to presence of other distinguishable varieties and germination failures. The farmers also faced the problems of late payment made by the purchasing agency, late release of subsidy, timely non-availability of seeds. The analysis on economics of seed production indicated that the expenditure on miscellaneous items like drying, marketing, registration and field inspection charges contributed towards the differences between the seed and commercial production. The cost of cultivation was higher in seed production as compared to the commercial production. The total return was higher in seed production than commercial crop production. The discriminant analysis indicated that there were significant differences in the gross return between seed production and commercial rice production.