Kashmir Tourism Faces a Long Lull Amid Geopolitical Tensions

The April 2025 attack in Pahalgam, Indian-administered Kashmir, has plunged the region’s tourism sector into a crisis with no clear path to recovery. What began as a devastating blow to livelihoods has now spiraled into a geopolitical standoff between India and Pakistan, threatening to prolong the downturn for years. With bookings collapsing and infrastructure projects frozen, investors are left to grapple with the question: Is Kashmir’s tourism revival over?

A Tourism Collapse, Fast
The Pahalgam attack, claimed by militant group The Resistance Front (TRF), killed 26 civilians—primarily tourists—and triggered an immediate exodus. Within days, 80–90% of May and June bookings vanished, leaving hotels, restaurants, and transport networks in ruins. Taxi driver Gulzar Ahmad Wani, who earned up to $52 daily, saw his income drop to zero overnight. For many in Kashmir, tourism isn’t just a seasonal boost—it’s the lifeline for over 500 hotels and thousands of informal workers.

The economic stakes are staggering. Tourism directly accounts for 7–8% of Kashmir’s GDP, with indirect contributions (including transport, trade, and services) reaching 29%. Analysts estimate the attack could erase $4 billion in annual revenue—a loss that will ripple through small businesses, laborers, and local governments. “This isn’t just a dip; it’s a potential existential crisis for tourism-dependent communities,” says economist Ejaz Ayoub.

Geopolitical Fallout Derails Growth
The attack’s geopolitical consequences have compounded the damage. India and Pakistan have entered a cycle of military posturing, suspending critical agreements like the Indus Waters Treaty and closing trade routes. The fallout has stalled $40 billion in infrastructure projects, including the Delhi-Amritsar-Katra Expressway, which promised to revolutionize accessibility to tourist hubs.

Meanwhile, militant groups are targeting tourism infrastructure deliberately. The Pahalgam attack, unlike earlier strikes, focused on civilians—a shift meant to erode trust in safety. “They’re not just attacking tourists; they’re attacking the narrative of ‘normalcy’ that India has built,” says CFR analyst Steven Honig.

The Long Lull Ahead
Recovery hinges on two variables: de-escalation and trust. Yet neither seems likely. A LocalCircles survey found 62% of families canceled travel plans to Kashmir until at least late 2025, with only 29% willing to return within three years. Pilgrimage traffic—critical for 40% of tourism—is also in doubt, as the Amarnath Yatra (July 2025) faces safety concerns.

Even if calm returns, the damage is structural. Loans taken by entrepreneurs to expand tourism ventures now risk defaulting. “We’re not just losing revenue—we’re losing a generation of investment,” says hotelier Arshad Ahmad.

Investment Implications
For investors, the calculus is grim. While tourism stocks like Kashmir Resorts Ltd. (KRL) or infrastructure firms tied to the region may offer short-term bargains, the long-term risks are immense. Key risks include:
- Geopolitical volatility: A nuclear-armed India and Pakistan remain locked in a cycle of distrust, with no backchannel diplomacy.
- Infrastructure delays: Projects like the Vande Bharat Express to Srinagar face indefinite holds.
- Psychological impact: Militants have succeeded in making Kashmir synonymous with danger, not adventure.

Conclusion
Kashmir’s tourism sector is in freefall, with no quick fix. The $4 billion annual revenue stream that once powered local economies now faces a multiyear slump, exacerbated by geopolitical tensions and militant sabotage. Investors should brace for a “long lull”—a period where even resilient infrastructure projects and pilgrimage-driven niches may struggle to offset losses.

The path to recovery requires three things: de-escalation between India and Pakistan, rebuilding public trust through enhanced security, and diversifying the economy beyond tourism. Without these, Kashmir’s golden age of travel—a symbol of India’s post-2019 normalization push—will remain a distant memory.

As one analyst put it: “This isn’t just about tourists. It’s about whether a region can survive when its economy and identity are held hostage to politics.” For now, the answer is clear: it’s not.