The rural nonagricultural/nonfarm sector (RNFS) has been gaining prominence in (rural) development theory and practice in many developing countries of the world since the 1970s. It is widely argued that the RNFS is able to generate employment and reduce poverty in rural economies, which are otherwise plagued by a stagnant agricultural sector. The existing literature on the RNFS has situated the development of the RNFS in terms of its economic linkage with rural-agricultural or urban-industrial sectors. While this literature has contributed to our understanding of the RNFS, it has not adequately explained the processes and outcomes of RNFS in relation to its capitalist class character. In other words, there is a dearth of political-economic analysis of an important sphere of economic activity. This inadequacy along with the fact that much of the research on rural capitalist relations (id est on rural political economy) has been on rural-agricultural activity, define the points of departure for this research project. This dissertation examines the historical-geographical development of capitalist/class relations of non-agricultural activity within rural spaces. The study is contextualized in the coir industry -- an important rural nonagricultural industry -- in Kerala, India. The empirical findings of this research show that class differentiation and class relations in the RNFS emerge historically and spatially, driven by the principles of commercialization, capitalist accumulation, profit maximization and competition. Colonialism set the stage for the initial economic subordination of labor under capital in the coir industry, establishment of capitalist market and formation of a huge reserve army of surplus labor. Production in the industry is dominated by its capitalist form. Relations to property and labor power are expressed in a variety of place-specific forms. These include not only relations between private capital and labor but also capital-labor relations in the cooperative and state-managed sectors. A large section of the economically active population in the coir sector, which can be called a reserve army of labor, is 'self-employed' and connected to the capitalist system in the realm of exchange relations. Employers employ workers at low wages and control them through various mechanisms including technological control at the point of production, which workers accept owing to their vulnerable conditions in the struggle for a living wage. Class relations also condition and are reinforced by non-class relations of gender and caste in the coir industry.