The crop production in the district of Kasaragod in Kerala State (India) is characterized by low input-low yield concept and rain-fed agriculture. A field study was conducted in Western Ghat region of the district to develop a suitable rainwater harvesting system adoptable to hilly terrains and to test its efficacy for improving the use efficiency of the harvested water by its multiple uses. The cost-benefit analysis of the water harvesting system was also carried out to find out its affordability to farmers. The water harvesting system has been developed by integrating three components: (i) improving the productivity of coconut and component crops in the cropping units (ii) developing multiple water use systems, and (iii) the conjunctive use of the harvested water along with other surface and groundwater resources. Based on the estimated annual costs and returns, the Benefit -Cost ratio was found to be 1.69 and all other financial viability criteria (IRR and NPV) were also found favourable for investment on a lined water harvesting tank integrated with a micro-irrigation system and fish farming. The study suggested that the rainwater harvesting could be implemented as a viable alternative to conventional water supply or on-farm irrigation projects considering the fact that any land anywhere can be used to harvest rainwater. Further, the water use efficiency can be improved through effective harvesting and subsequent multiple uses of stored water.