This paper illustrates the major challenges faced by globally recognised classical art forms through the examination of Kutiyattam, a centuries old renowned theatre form of India, Kutiyattam was declared by the UNESCO in 2001 as an intangible heritage of humankind. During the mid-twentieth century, Kutiyattam performers came out of their traditional performing space in Hindu temples, encouraged by the proactive support of the State. In the wake of the UNESCO recognition for the theatre form, State support measures underwent further strengthening. However, in spite of this, India’s Kutiyattam institutions are confronted with a serious economic crisis that threatens their very existence. Based on detailed field studies and stakeholder consultations, the paper analyses the policy roots of the crisis and explores the options for transforming the Kutiyattam institutions into sustainable enterprises. We argue that the lessons offered by this study have implications for similarly situated art forms in India and elsewhere.