Date of Publication: 5 January 2025 ISBN-13: 978-81-982859-6-6 Jammu & Kashmir and Punjab, though sharing a geographical proximity, have unique economic and industrial environments. Jammu & Kashmir has faced challenges stemming from socio-political unrest and its rugged terrain, which have impacted industrial development. In contrast, Punjab, historically known for its strong agricultural base, has been at the forefront of industrialization in India, particularly in sectors like textiles, food processing, and manufacturing. However, both regions face the common challenge of adapting to a rapidly evolving digital economy, which has become indispensable for staying competitive. This study compares the role of IT in enhancing the productivity and growth of small-scale industries in these two states. By focusing on specific industries, including textiles, handicrafts, food processing, and manufacturing, we aim to understand how IT adoption has not only streamlined operations but also facilitated access to new markets, improved supply chain management, and fostered innovation. The challenges, opportunities, and policy implications for small-scale industries in Jammu & Kashmir and Punjab are analyzed through both qualitative and quantitative methods, offering a comprehensive picture of IT-driven industrial growth.