Sikkim's gross state domestic product for 2004 is estimated at $478 million in current prices.

Sikkim's economy is largely agrarian, based on traditional farming methods, on terraced slopes. The rural populace grows crops such as cardamom, ginger, oranges, apples, tea and orchids.[4] Rice is grown on terraced hillsides in the southern reaches. Sikkim has the highest production and largest cultivated area of cardamom in India. Because of the hilly terrain, and lack of reliable transportation infrastructure, there are no large-scale industries. Breweries, distilleries, tanning and watch-making are the main industries. These are located in the southern reaches of the state, primarily in the towns of Melli and Jorethang. The state has an impressive growth rate of 8.3%, which is the second highest in the country after Delhi.

Elaichi or Cardamom is the chief cash crop of Sikkim.In recent years, the government of Sikkim has promoted tourism. Sikkim has a vast tourism potential and by tapping into this the state has grossed an earnings windfall. With the general improvement in infrastructure, tourism is slated to be the mainstay of the Sikkim's economy. A fledgling industry the state has recently invested in is online gambling. The "Playwin" lottery, which is played on custom-built terminals connected to the internet, has been a commercial success, with operations all over the country.[13] Among the minerals mined in Sikkim are copper, dolomite, limestone, graphite, mica, iron, and coal.

The opening of the Nathula Pass on July 6, 2006 connecting Lhasa, Tibet to India is expected to give a boost to the local economy, though the financial benefits will be slow to arrive. The Pass, closed since the 1962 Sino-Indian War, was an offshoot of the ancient Silk Route, which was essential to the wool, fur and spice trade.