The handicraft industry of Jammu and Kashmir represents a vital component of the region’s cultural heritage and economic structure, providing livelihoods to thousands of artisans. However, this traditional sector faces numerous challenges, including declining market demand, competition from machine-made products, limited access to credit, and inadequate infrastructure. This research explores the multifaceted issues affecting the industry and critically analyzes the effectiveness of various government initiatives aimed at its revival and sustainability. Through a review of existing literature, policy frameworks, and recent data, the study assesses the impact of schemes such as the Pahari Speaking Board initiatives, Karkhandar Scheme, PM Vishwakarma Yojana, and others. The paper also highlights the importance of skill development, digital marketing, and improved policy implementation in strengthening this sector. Finally, it offers recommendations for enhancing the resilience and global competitiveness of Jammu and Kashmir's handicraft industry.