Hardly there is any attempt to understand the Growth and transition of the Alternative Medical sector in India. Here, in this study we attempt to address the issue through a case of Ayurvedic medicine in the Southern State of Kerala, India. It explores the growth of idea of manufacturing and the scope and prospects of this contemporary industry in the overall manufacturing sector of Kerala and also attempts to outline the intricacies of the sector, mainly relating to its structure, raw material source and linkages. The study shows the sector has strong linkage with medicinal plant as well as toursism sector in the state, which can work out as a cluster promotive strategy with in the state development paradigm. Finally we have explored two cases to understand whether the sector would be sustainable or not, and the result seems to be Positive. This is done with primary information through a questionnaire from the major ayurvedic firms in Kerala, as there is not a systematic data base for this industry yet. This fills an important gap in the literature, with some preliminary idea about the prospects of a traditional knowledge based sector in India.