This study was conducted to assess the extent of value-addition, employment generating potential and economics of peanut-candy and salted-peanut small-scale units in India. In the low-capacity peanut-candy units, the value-addition at the end of Stage-I (pod to kernel) was $ 2.4/q, whereas, it was $ 2.2/q in the high-capacity units. In salted-peanut units, the value-addition in the low- and high-capacity was $2.2/q and $2.3/q, respectively. In Stage-II (kernel to final product), the value-addition was high across sizes and type of the processing units. Around 525 and 635 man-days of employment/month/unit were generated by low and high-capacity peanut-candy units, respectively. The employment generation was less in salted-peanut vis-à-vispeanut-candy units due to different processing methods. The kernel alone constituted 50 to 52 per cent of the total cost in peanut-candy, and 89 per cent in salted-peanut units. The sensitivity analysis revealed that change in the kernel price directly affected the magnitude of profits. The important policy implications emerged were: if the units process the pods to obtain kernel (Stage-I) instead of procuring kernels from the market, considerable value-addition can be made, kernel price directly affects the profits and hence an appropriate mechanism like ‘contract farming’ would stabilise the kernel prices, majority of the units retrench labour during off-peak period due to less demand and hence diversification in processing will generate sufficient employment to retain the existing skilled employees, and appropriate policy intervention is necessary to address the capital, technology and marketing constraints of the peanut processing units.