The hotels and travel operators said on Thursday their industry would be hurt by the government's decision not to issue visas for visitors in order to combat the spread of coronavirus.
With 74 confirmed cases of the virus and no deaths, India has so far fared better than elsewhere in Asia, Europe and North America. But experts say that already overstretched medical system would struggle to deal with a major rise in serious cases.
The government said on Wednesday it would cancel almost all visas until April 15, a move that could damage an industry that caters to about 10 million foreign tourists a year.
"Everything has been cancelled," Rachna Singh, CEO of the Federation of Hospitality and Tourism of Rajasthan, saying many people who had booked to visit next month had abandoned plans.
She said four in 10 people relied in some way on tourism in Rajasthan, where some of the country's first cases of coronavirus were reported last month among a group of Italian visitors.
"All our members are suffering at the moment," said Chetan Gupta, general secretary of Indian Association of Tour Operators, adding that the visa ban risked taking tourism and business activity to an "all time low".
Sooraj Nair, director of the five-star Crowne Plaza hotel in Kerala's Kochi famed for its spices, said occupancy at his hotel had dropped to 20%. The average hotel occupancy in 2019 was around two thirds.
The government and industry sources said on Thursday they expected economic growth to slide for at least two quarters.
Share prices of airlines tumbled on Thursday, as the visa ban prompted ticket discounting in an already depressed air travel market. Other nations also took steps to combat the virus.
The Maldives archipelago declared a public health emergency giving the government extra powers to ban pubic gatherings and Sri Lanka ordered schools closed for more than five weeks.
Sports Secretary RS Jhulaniya told Reuters that the chief ministers of two states where India will play South Africa this month have been told the matches can go ahead but that stadiums must be empty.
Brijesh Patel, Indian Premier League (IPL) chairman, said a meeting would be held on Saturday to discuss "all possibilities" regarding the tournament that is due to start this month, including visas for overseas players and whether spectators could watch.