Kottayam is a major trading center of natural rubber in India. Rubber trees are extensively cultivated in central Kerala, on plantations, both large and small especially in vast areas of Kottayam District, . The Rubber Board, a body set up by the Government of India for the development of the rubber industry, is located at Kottayam. A number of small and medium sized enterprises in and around the town are engaged in the processing of rubber latex and manufacturing of rubber products. Besides rubber, Kottayam is a trading place of other commercial crops like spices cultivated widely in the surrounding areas. The Plantation Corporation of Kerala has its headquarters at Kottayam. Kottayam is also known as a business center. The stretch of Kottayam–Kumily Road (KK road) that passes through the town is a major shopping centre. Sastri Road, one of the broadest roads in kottayam, is also popular for shopping and has outlets of many national and international product brands. Baker Junction and Kanjikuzhy are also considered as commercial and residential hubs of the town. Kottayam district has industries like Hindustan Newsprint Limited, Kottayam Spinning Mills and KSE factory.
Tourism is a major contributor to the economy as many tourism related businesses thrive in the town. Kumarakom, a popular tourist destination in Kerala, is located 14 km from the town. Wagamon, another tourist destination is located on the borders of the districts of Kottayam and Idukki.
Kottayam is known for religious tourism. St. Alphonsa, the first woman to be canonized as a saint by the Syro-Malabar Catholic Church was born and raised in Kottayam
