This paper explores the incidence and causes of child labour in the carpet industry of Kashmir valley. An empirical study was conducted using structured questionnaire to determine the different reasons for child labour in carpet industry in Jammu and Kashmir (India). The survey data was collected in 2013 in District Baramulla of State of Jammu and Kashmir (J&K). In the results, poverty, absence of adult wage earner, illiteracy and parent unemployment were found the main causes for the incidence of child labour in study area. About 68 percent of child labour in case study is caused by poverty, 27 percent and 10 percent by illiteracy and parent unemployment respectively. Results showed that families having larger in size may also be responsible for child labour. The study further enlightens about several laws and enactments about child rights and their working conditions. It further studies the extent to which labour laws in the state are in consonance with the core international labour standards. The study suggested that on one hand the main causes of child labour should be eradicated and on the other hand presents that the legislative framework for child welfare should be strictly implemented to overcome this social evil.