Cashewnut plays a prime role in the Indian economy, accounting for 16.95 per cent of the total area under plantation crops, which stood second position after coconut, and production of cashewnut accounts to 16.57 per cent of total production of selected plantation crops in India. Area under cashewnut accounts for 5.20 per cent of the total horticultural crop area and production of cashewnut accounts to 0.38 per cent of major horticultural crop production in India. The more variability in production (18.33per cent) was also observed at all India level. The coefficient of variation in the overall period for area was highest in case of Maharashtra (77.93per cent), followed by Tamil Nadu (41.34per cent), Orissa (38.23per cent) and Goa (31.94per cent).The relaxation in terms of land ceiling laws also could help in the expansion of area under cashew plantations in the states of Maharashtra, Tamil Nadu and Goa. But higher yield instability in Tamil Nadu was mainly due to more fluctuation in production of raw cashewnut on account of high degree of yield variability (619.59 per cent). The instability analysis in raw cashewnut production confirmed that the magnitude and sources of change in variance of production varied across the states and the country as a whole. There is a need for yield and area stabilizing policies through appropriate Crop Insurance Scheme for cashew in order to protect the cashewnut producers from high fluctuations.