Utilization of biomass energy from various agricultural wastes for local usages and its removal through open burning potentially increase emission of Green House Gases (GHGs), deteriorate air-quality, formation of tropospheric ozone and create trans-boundary health hazards in countries of South East Asia. The effect of common agro-waste management practices in soil quality and agricultural production system over this part of the world is not well documented. In the present three-years long study, spanning over two entirely different agro-ecological zones of India and Bhutan, highlights the impacts of the burning of agricultural waste in soil physio-chemical properties, biological properties and crop production. The current study also focuses on the alternative usage of crop residue to enhance soil organic carbon, soil moisture, soil nutrients and soil biological activity through the application of biochar and raw agricultural waste generated from the field. It was observed that crop residue used as raw mulch and biochar improved the agricultural production up to 36%–64% over the experimental fields of India and Bhutan. The results from the study disseminated among the local farmers and technological support were provided for practicing alternative crop residue management. Nearly 1450–1500 farmers in India and 100–125 farmers in Bhutan have adopted the agro-waste management practices of removal and re-application of agro-wastes in the field. A total of ~26000 t of CO2 emission has been reduced in two intervention sites during the study period. The present action-research helps to propose future guidelines for environmental friendly crop residue utilization and management and simultaneously help to improve agricultural yield along with soil quality.