The economy of Jammu & Kashmir is largely dependent on farming and animal husbandry. The manufacturing and services sectors are also growing rapidly in the region. In recent times, several consumer goods manufacturing companies have shown their interests to set up their units in this region. Before the insurgency of 1989, tourism formed an important part of Kashmiri economy. But after that, tourism economy in the Kashmir valley was worst hit. However, Jammu and Ladakh continue to be popular sites of Hindu pilgrimages for last few decades.

The forests resources of the valley provide huge revenue to the state. A rich variety of conifers such as fir pine, spruce, deodar, chir, kali, etc. are of great economic value. The woods are useful for Match Industry, Sports goods industries, Sentonin Factory etc. Wood from Kashmir is also used to make high-quality cricket bats, popularly known as Kashmir Willow. Kashmiri saffron is also very famous and brings a handsome amount of foreign exchange.