At present, no commercial indigenous plant growth-promoting rhizobacteria (PGPR) is available for Capsicum crop in North-Western Himalayan Region. Therefore, PGPR were isolated from rhizosphere and root samples of capsicum collected from 28 locations of agro-climatic zones I, II and III of Himachal Pradesh. Thirty-four morphological distinct isolates were screened for multifarious plant growth-promoting traits. Four best PGPR isolates (MAT(8), KAN(11), JHA(6) and ROH14) exhibiting maximum increase in capsicum seed germination were further screened at 80, 60 and 40% of recommended chemical doses of nitrogen (75 Kg ha(-1)) and phosphorus (70 Kg ha(-1)) fertilizer (RDNP) for capsicum growth and yield under net-house conditions. Two isolates, ROH14 (Bacillus amyloliquefaciens, Accession number KX447671) and JHA(6) (Pseudomonas aeruginosa, Accession number KX447673), alone and in consortia along with 60 and 80% RDNP were further selected for two-year field experimentation. The conjoint application of PGPR isolate (JHA(6) and ROH14) along with 80% RDNP brought a significant increase in yield (25.9%), plant height (8.2%), biomass (9.4%), nitrogen (47.1%) and phosphorus uptake (34.0%) over 100% of recommended doses of chemical fertilizers. In addition, the treatment also resulted in enhanced soil properties in terms of available contents of nitrogen and phosphorus, enzymatic activities (dehydrogenase, phosphatase and phytase), microbial population and microbial biomass-carbon besides providing net return of Rs 4484170. The study, therefore, indicates the potential of Bacillus amyloliquefaciens (ROH14) and Pseudomonas aeruginosa (JHA(6)) in partial replacement of nitrogen and phosphorus (similar to 20%) applied through chemical fertilizers, providing Benefit/Cost ratio 2.73 along with sustainable crop production.