The hydropower in Himachal Pradesh at micro level can be harnessed by tapping the water energy at the various sires, where sufficient quantity of water and a drop of 2-4 m is available in a tributary, which save the commercial energy used for agro industries. Presently, a number of water mills in the Kangra valley are in operation for running various agro-based machines by utilizing the source of water as energy. Keeping this in view the vertical and horizontal water mills installed in the Palampur area of distict Kangra have been studied to compare their advantages, energy saving, functioning, constraints, and problems faced by the beneficiaries. It is observed that a number of operations can be performed by the horizontal water mill with the help of various machines, such as flour mill, rice huller oil expeller etc., while only one machine, i.e., flour mill, can be successfully run by the vertical water mill. Though the installation cost of the horizontal water mill is high in comparison to the vertical water mill, it ran be suitable for installing domestic agro-based industries which will provide employment to unemployed rural educated youth. The savings in the form of electrical energy will be as much as 1.3 MW and 2.6 MW per month with the adoption of vertical and horizontal water mills, respectively.