Agriculture, forest products, animal husbandry, sheep rearing and cottage industries are the main sources of economy of Uttarkashi District. In these areas agricultural production suffers from many constraints. The availability of cultivable land itself is the greatest restricting factor on the development of agriculture. It can be seen from the fact that as much as 88 percent of the area is either covered by forests or is barren and uncultivable. The land is low in fertility except in the valleys and even land is too few and far between. Shorter agricultural season, low temperature, high altitude, smallness of land holding, perpetual problem of soil erosion due to steep gradients etc. are other inhibiting factors affecting agriculture. The agriculture, therefore, does not offer too much hope for bringing about well being to the people of the area.

Sheep rearing for production of wool and meat, orchard raising, spinning and weaving of wool and other cottage industries etc. offer much scope to the people. Cultivation in these areas is carried on largely by making terraces on the sloping hillsides. Some cultivation is done on steep hills also where terracing and tilling cannot be done and the place is cleared by burning scrubs and bushes. The seeds are sown with the help of a hoe. Both Rabi and Kharif crops are harvested. The main Kharif crops are paddy, small millets and potato and Rabi crops are wheat and barley. These crops account for over 80 percent of the total cropped area. Horticulture is another field that supports the economy of Uttarkashi District. However, it has not made much headway due to difficulties in marketing the produce, due to poor communications and remoteness of areas. Animal husbandry is an important source of supplementing income of the rural population of Uttarkashi District. Sheep rearing is an important industry in the district. Yet it does not provide full time employment.

The knowledge regarding occurrences of minerals in Uttarkashi District is scanty. As per stray surveys, soap stones, iron, graphite, lime stone, kyanite and mica deposits occur in the district. However, there has been hardly any industrial development in the district. The cottage and village industries play an important role in the economy of Uttarkashi District. The most important cottage industry is the production of wool and woolen goods. Sheep are reared in a large number and the industry flourished at an altitude between 1525 metres and 2440 metres. Carpets, tweeds, blankets etc. are produced. Other cottage industries include basket-making, mat weaving and wood craft. The potentials of forest and horticulture can be better exploited by locating forest and horticulture based industries within the district. Tourism industry also contributes to the economy of Uttarkashi District.