The Mumbai attacks have hit export-oriented trade as foreign buyers skip the peak shopping season amid travel warnings from overseas governments, experts said.
India's export growth, already hit by the global financial crisis, could even halve by March-end, industry officials say, with key sectors like textiles, jewellery and handicrafts the hardest hit, following the attacks.
"We've seen a slowdown after the terror attacks," Ganesh Gupta, president of the Federation of Indian Exporter Organisation (FIEO), told newswire AFP.
"Main buyers are not coming to India and prefer to travel to China and Taiwan," he said.
"Our exports growth is expected to be 15 percent for the year-to March 2009 compared with 28 percent last year," said Ajay Sahaini, director general at FIEO.
As India's most cosmopolitan city, with good domestic and international air links plus a vibrant nightlife, Mumbai - dubbed the "Maximum City" - is a magnet for visitors.
On the streets of Colaba, normally a haven for shoppers with banks of street vendors selling trinkets, souvenirs and clothing, stall holders and shopkeepers said they had noticed a definite fall in business since the attacks.
The south Mumbai district - which houses the Taj Mahal hotel and the popular Leopold's cafe - was at the centre of the militant attacks.
"We stock merchandise specifically for foreigners. They're just not there, and sales are down 70 percent," said Mohinuddin, who owns an antique shop just off the main drag of Colaba Causeway, last Sunday - normally the busiest day.
"We have no footfalls. Business is completely crippled at the moment," added Mohammed Ashraf Shall, manager at the Kashmir government's Art emporium in the nearby Fort area, also in south Mumbai.
"This was an attack on the country and our economy."
The Kashmir emporium which has a mainly foreign clientele was deserted during the week.
"Our business is down by 75 percent after the terror attacks," Ashraf said.
Since the strikes on two luxury hotels, the city's main railway station and a number of other sites, several countries, including the United States, Britain and Australia, issued travel advisories for nationals.
Britain's Foreign Office, for example, warned against "all non-essential" travel to the city in the immediate aftermath of the attack, although this advice has since been lifted.
Those who managed to escape the carnage recalled gunmen who stormed the hotels singling out British and US nationals while Israelis at a Jewish cultural centre were also targets.
Also hit by the 60-hour siege were holiday and business bookings at city hotels, prompting pleas from local tourism chiefs for foreigners not to stay away.
But hotel owners feel fear is lingering just at the height of the season.
Last year, nearly two million foreign tourists came to Maharashtra state, of which Mumbai is the capital.
"The terror attacks could not have come at a worst time," said Chandrahaas Shetty, president of Indian Hotel and Restaurant Association.
Small- and medium-sized hoteliers across the city estimate that business from night parties and other get-togethers have been cut by just over a third since the attacks.