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Synopsis Tourism has played a significant role in transforming mountain communities of the world by diversifying economy and generating employment opportunities and mordernizing these societies. Sustainability of the ‘name-and-fame’ of a tourist site is dependent on the sustainability of its desired environmental and socio-cultural features. Tourism in Kullu and Manali is now a well accepted options for its economic development, because of its contribution towards income and employment generation in the area. However, the tourist industry in the region is under pressure to maintain the physical and environmental standards that have traditionally been associated with the region. Based on the empirical data, this study is an attempt to assess the socio-cultural as well as the economic impact on the host environment.