India's poultry industry is bracing for major losses after the country reported its first outbreak of bird flu. Domestic sales and exports of poultry products have been badly hit.

For more than two years after bird flu spread through several East Asian countries, India's poultry farms remained free of the deadly H5N1 virus.

The $7 billion poultry industry in India is among the largest in the world. It not only supplies a huge domestic market, but eggs and chickens are exported to countries from Japan to the Middle East.

But a distraught industry has begun piling up massive losses since the virus struck the western state of Maharashtra more than a week ago.

Neighboring countries such as Nepal, Sri Lanka and Bangladesh quickly imposed a ban on poultry imports from India.

At home, panicked consumers are staying away from chicken preparations and eggs. Indian Railways and several airlines have stopped serving chicken dishes. And some of India's favorite dishes, including butter chicken and chicken tikka are off the menu in many restaurants.

Bharat Tandon, president of the Compound Livestock Feed Manufacturers Association, says poultry farmers and traders are reeling from a virtual consumer boycott.

"Prices have softened, both birds and eggs," he said. "Demand has fallen by at least 30 percent. They [poultry farmers] will be devastated. They have already got flocks ready for marketing. They will not even be able to recover their costs."

The industry and the government have joined hands in assuring consumers that chicken products are safe and the virus has struck chickens in only a small part of Western India. Authorities have virtually sealed off the town where the infected chickens were found in a bid to contain the virus. Road and rail traffic is being restricted to prevent locals from moving into neighboring areas, even though there are no confirmed cases of bird flu in humans.

Tandon says they are doing everything possible to calm people's fears about bird flu.

"We are repeatedly trying to assure the lay public through the media that there is really no harm in eating birds or eggs provided you cook them right. And we are just trying to build back public confidence," said Tandon.

But distraught traders and farmers admit that, even if confidence in poultry products is restored, it will still be months before the poultry industry recovers its losses.