Border questions with India sometimes border on the absurd. There's much heartburn between the two neighbours on restricting the flow of people and merchandise, and now it is causing a lot of anxiety to Indian tourists visiting Nepal. They are told at Delhi, Calcutta or Banaras airport that they can't fly unless they have the proper documents. Ironically, the land border remains open, and only people flying in face the new restrictions.

The earliest guidebooks on Nepal advised travellers to visit the country during October-November and March-April, saying that at other times the kingdom was too cold, too hot or too wet. Then in the 1970s, Dick Tuttle, the American gambling pioneer in Nepal, triggered an Indian invasion with his "555" package for Indians. The seasonality factor vanished as the Indians with wads of money poured in. "India is the greatest market for Nepal-a billion people captive," says Dubby Bhagat, of Everest Hotel.

Then why is there a sense of foreboding now? Most Indians come overland, but a sizeable percentage of Indian tourists do fly in. It is this segment that could be diminishing. Indian tourist arrivals haven't really picked up since the Indian Airlines hijacking last December. And those who do come are put off by the extra-special security introduced at Kathmandu airport upon the Indian government's insistence where passengers have to wait up to 45 minutes on the tarmac for their third body check before getting on their Indian Airlines flights.

In addition is the requirement that Indians flying to Nepal need either a voter ID card issued by the Election Commission of India, a central or state government issued ID card, or a passport. (Nepalis flying to India also need to furnish proof of their nationality.) It remains debatable whether this new rule has actually improved security for India, but it has had a big negative effect on the tourism industry. Many Indians do have passports, but most don't. The trader from Chandigarh has a passport because he has been around. His wife has a voter ID card, but doesn't have a passport. Their two children have neither. They are stopped at Delhi airport and can't board the plane.

"Any restriction is bound to have a negative impact. To minimise such an impact we have started an information campaign in India telling people that they need these documents to travel to Nepal," Pradeep Raj Pandey of Nepal Tourism Board told us. But Pandey sees a positive side-effect in that Nepal may actually get a "better class" of travellers. A source at the Indian embassy too admitted that the restrictions have adversely affected the number of Indian tourists flying in.

Businessmen in the capital are crying foul. The Indians are just not coming. "Per se the India-Nepal connection has suffered," says Everest's Bhagat. "Indian tourists spend more than foreigners. This is vexatious." The president of the Hotel Association of Nepal (HAN), Narendra Bajracharya, feels the same way: "If this restriction stays in place it will affect us all in the long run."

The ubiquitous Indian travellers asking the way to Bishal Bazaar as soon as they get out of the airport are fewer these days. Says Randhir Manot who runs Abhinandan, a shop selling expensive silks, saris and designer watches at Bishal Bazaar: "This has affected us. I would say business is down by half." There are those who agree with him whole-heartedly, such as the manager of Shoe Centre in the same market: "I am definitely affected. Indian tourists give me my profits."

But not all shopkeepers agree. A patently nationalistic one thinks the market is a place where "Indians sell to Indians" and Nepal doesn't actually benefit. He told us: "We really don't need the Indians to give us business. It is true that some shops are more tourist dependent-they feel the pinch."

The manager at Bluebird Department Store couldn't hide his anger: "They ought to enforce these restrictions even at the land border. We have a population problem already." He seemed to confuse his business with a perceived threat of migration.

Casinos are high-end splurge destinations, so most of the clientele from India have passports and fly right in. But early trends show that five-star hotel occupancy has suffered. Not only is gambling tourism affected, but also dealer conferences, because they are now more difficult to organise as not everyone has the necessary ID. "The dealers and small manufacturers from Jalandhar (in Punjab) do not necessarily have a passport. And if they do, what prevents them from going to Bangkok. Thai operators have set up offices in Mumbai just to woo Indian tourists and conferencees," says another tour operator.

A drop in Indian influx will hurt on the other side of the border too. There are tour operators in India (some 200 of them), including names like Sterling and Explorers, that are going to be hit. But worst affected will be travel agents, resorts at Nagarkot and Dhulikel, transporters and people who benefit directly and indirectly from the tourism industry. So far they have been riding the crest of the autumn season, but we are approaching a period-mid-December to mid-January-when Indians thronged the streets of Kathmandu and took time off at resorts. It is when the air seats begin to go empty that Nepal's tourism industry will feel the pinch.