Indian government analysts have predicted that if the forthcoming conflict between the United States and Afghanistan goes ahead, the country's tourism industry will be greatly affected, and have predicted that around 50% of inbound tourists will immediately cancel their trip.
A number of meetings to discuss how to revive the ailing industry in the event of war have been called this week, and the Indian government is thought to be considering offering tax cuts for hoteliers, and asking the major private sector players to reduce their tariffs accordingly.
The Delhi government has already moved on this issue, slashing the luxury tax from 12.5% to 10%. However, in the Indian tourist industry, taxes vary from state to state, and can account for anywhere between 25% to 50% of the customer's bill. The industry is concerned about the discrepancy between levels of taxation in India and abroad (where such taxes are typically between 4% and 6%), which they fear may harm the country's competitiveness in already strained circumstances.
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