Pathankot is an economically prosperous city compared to many other towns of the Punjab or Himachal Pradesh.
Historically, Pathankot's economy was based upon the timber trade. Good quality wood was transported from Himachal to Pathankot, where it was cut and distributed to various parts of northern India. In the early 1990s, however, the timber trade shifted to Jammu. Now, the main economy of Pathankot is based on stone crushing. Panthakot is situated in the foothills where the Chakki, Ravi and Beas rivers enter the plains and these rivers deposit boulders. There are more than 200 stone crushers in and around Pathankot.
After the liberalization of the Indian economy, Pathankot emerged as a commercial center of wholesalers and distributors of consumer goods and services, catering to Himachal Pradesh, J&K and northwest Punjab.
Many army and Air force personnel are stationed at Pathankot and in nearby areas. The Army and Air Force award contracts to local vendors and their personnel consume local goods and services, contributing to local prosperity
