The governance and administration of the territory of Puducherry falls directly under the authority in New Delhi. Pondicherry has an elected legislative assembly and a cabinet of ministers. The government is permitted to make laws with respect to specific matters. In many cases, legislations have to require ratification from the President of India. The Centre is represented by the Lt. Governor, who resides at the Raj Nivas, which is at the Park, the former palace of the French Governor. The Central government is involved in the financial well-being of the territory, as against the states where financial administration, given a budgeted central grant is the responsibility to the state governments. Puducherry has at various times, enjoyed lower taxes.

Some of the important political parties of Puducherry are:

•All India Anna Dravida Munnetra Kazhagam
•Dravida Munnetra Kazhagam
•Pattali Makkal Katchi
•Bahujan Samaj Party
•Bharatiya Janata Party
•Communist Party of India
•Communist Party of India (M)
•Indian National Congress
•Nationalist Congress Party
•Puducherry Munnetra Congress