The worst financial crisis in 80 years, high oil prices and a slew of militant attacks has hit an industry that has basked in double-digit growth numbers of both domestic and foreign tourists in recent years, according to data from the Ministry of Tourism.

October saw an increase of just 1.8 percent in the number of foreign tourist arrivals compared to the same time in 2007, prompting the Indian government to ask hotels to slash their prices by 10 to 15 percent in the hope of keeping demand high.

"We are seeing the early stages of a slackening of the market," Madhavan Menon, the managing director of Thomas Cook India Ltd, told Reuters, adding that: "2009 is going to be a difficult year."

A slump risks undermining India's enormous growth potential in the tourism sector, which the U.N.'s World Tourism Organisation (UNWTO) said has also been let down in the past by a lack of adequate accommodation and poor infrastructure.

Despite its vast size, diversity, and array of historical monuments, India still ranks at no. 42 in the world's holiday destinations of choice -- below much smaller countries like Belgium (33rd) and Hungary (26nd), a UNWTO report said.

Representatives from the hotel, tour agents and hospitality industries met tourism secretary Sujit Banerjee on Thursday and expressed apprehensions regarding the slowdown. Confirming the meeting, Banerjee said, "We are concerned over the impact of the global recession on tourism. I plan to take up issues related to visa fee waiver and service tax abolition on bookings made by tour operators with the relevant ministries.''

He added that reduction in entrance charges for monuments would also be looked at.

Visa fee waiver at $35 could mean a substantial hit to the coffers. According to sources, there have been complaints about lengthy visa procedures and the high fees from various quarters. At a time when India is a relatively expensive destination, such issues could spell trouble for the country.

India received 5 million visitors in 2007 and is estimated to get 10 million by 2010. Industry forecasts for the tourist season are gloomy with experts saying that foreign tourist arrivals (FTA) could be down by half to 7.8% if India's economic growth rate falls to 7% and global growth rate comes down to 3.2%. Tourist arrivals grew at a whopping 13%-14% in 2007.

Besides providing the much-needed foreign exchange -- India earned Rs 40,712 crore between January to October 2008 -- tourism is one of the country's largest employers.

Amongst other issues that were taken up at the meeting were focus on established markets like US and UK instead of spending time and resources on new and emerging markets.

Hospitality representatives also demanded a cut in luxury tax and road tax. Both issues require state government nod and are nettled with problems as most states disagree on a uniform rate. Sources said that a temporary tax holiday till the Commonwealth Games in 2010 could be considered.

The traditional Pushkar Fair in early November did bring some cheers to Rajasthan's tourism sector, tourist arrivals thereafter have continued to dip. High-end heritage hotels, mainly dependent on foreign tourists, are facing 10-15% dip in occupancies. Since hotels are major source of employment for locals, employment in Rajasthan have gone down drastically. Besides, the state is home to more than 200 handicraft-making units who have been left stranded. "The entire economy of Rajasthan is dependent on tourism. In Jaipur alone, around 45% of the population depends on tourism directly or indirectly for employment," said Rajasthan Association of Tour Operators president Khalid Khan. He added that though foreign tourists have come down to the state, they have curtailed their spend on shopping.

The situation in God's own country--Kerala--is nothing different. The slowdown has impacted the state's central part, known for its paddy fields and houseboats that ply on backwaters. According to AV George, who runs a homestay named Granary and co-promoter of a houseboat `Lakes and Lagoons', business was bad in October and it has adversely affected both the homestay and houseboat businesses. The best-selling package offered by Granary comprises one night on the houseboat and another at the village homestay. However, this offering has been hit by the falling number of tourists.

Describing the rural project as "responsible tourism", Tourism Secretary Sujit Banerjee said: "This is a very innovative rural tourism project which positions India's rural way of life as a unique visitor experience." "Now we are going into wellness, cruise, rural, adventure and faith tourism," Banerjee told PTI.

He also said that the current global financial downturn will not affect the burgeoning tourism industry in the country.

"We are absolutely hopeful that we'll be able to overcome the current economic downturn and have robust growth rate in tourism," he said.

The Secretary said the Tourism Ministry will strive to reduce hotel tariff and bring hospitality sector on par with infrastructure sector.

"We have requested the hoteliers to reduce the tariff by 10 to 15 per cent and urged the Reserve Bank of India to put the hospitality sector on par with the infrastructure sector rather than the real estate sector to bring down rate of interest for hospitality sector," Banerjee said.

By boosting infrastructure outside of India's bustling cities, the country can maintain its strong growth as a tourist destination, he said at the World Travel Market, the global tourism industry's annual fair in London.

"We are very optimistic and we are rebranding our tourism," Banerjee told AFP.

The number of international tourists visiting India has nearly doubled in the last five years, rising from 2.73 million in 2003 to 5.07 million in 2007, according to official figures.

His ministry expects it to slow due to the credit crunch, but is nonetheless hopeful that its plans to diversify the tourist market can keep visitors coming to India in the long-haul.

"We are promoting what is called responsible tourism and this is a very innovative rural tourism project which positions India's rural way of life as a unique visitor experience," said the minister.

More than 3 lakh travel and ticketing agents may lose their jobs with airlines stopping payment of commission to them from November 1.

The decision has seriously impacted the business of more than 29,000 non-IATA agents across the country, who only sell airline tickets. They account for more than 90 per cent of the trade and employ over 3 lakh people. Smaller agents employ around 10 people on an average.

A few months ago, cash-strapped airlines decided to do away with a 5 per cent commission they used to pay to travel agents as a cost-saving measure, aligning themselves with the global trade practice.

Instead of paying the agents directly, the airlines have asked them to charge a transaction fee of Rs 1,500-2,000 on domestic sectors and Rs 3,500-7,000 on international routes from customers.

"In India, we do not see clients paying directly to the travel agents that kind of amount unless it is incorporated in the airfare. That is not acceptable to the airlines. This move will directly impact the livelihood of about three lakh people who are in this business. On the one hand, the government is assuring us that there will be no job loss and on the other, we are facing this threat," said Vasuki Sundaram, chairman, Travel Agents Federation of India, TAFI).

Despite a cyclonic storm and torrential rain that disrupted the surface communication at Rupa on October 28, delinking both Tawang and West Kameng districts from rest of the country, the festival would be held as per schedule as the state government is working on a war footing to restore communication.

"The state government is making all an out effort to restore the road communication at the earliest", informed an official release.

Dorjee Khandu, chief minister, is believed to be in constant touch with the Border Roads Organisation (BRO) authorities, who maintain the strategic road, to monitor the progress.

Bandana Deori, tourism secretary of the state said that all preparations are over for the upcoming mega tourism event.