NEW DELHI: India's art world has converged on New Delhi for the industry's biggest annual event where upbeat talk and parties are likely to disguise a market that is still in the doldrums since crashing in 2008.

Indian art auction prices are down 70 to 75 per cent from their peak, when speculation driven by new prosperity in cities such as Delhi and Mumbai pushed them to “unsustainable levels”, says art analyst Anders Petterson.

Petterson, managing director of London-based global art market analysis firm ArtTactic, says India is still suffering from the after effects of the 2008 global financial crisis, but says he sees signs for cautious optimism.

“We glimpse a market gradually turning around,” he said.

The three-day India Art Fair - now in its fifth year and featuring 105 art houses - offers valuable global exposure to local artists and a chance for overseas galleries to woo India's increasingly affluent population with international works.

However artists and galleries still face a battle to restore confidence among buyers who are worried about the “sustainability of art values”, according to veteran art critic Kishore Singh.

“People want to know that if they buy a work at least it will be worth the same next year or in a few years and perhaps a little more,” he said.

The price of top works by India's Modernist masters - the late M.F. Husain and others from the Bombay Progressive Artists' Group - are returning to pre-crash levels, said Singh, but rich collectors are still nervous about taking risks.

A canvas by Tyeb Mehta, a top member of the Progressives' group, fetched a record price of $3.24 million in 2011, but the high price paid was seen as a one-off.

Works by the younger contemporary school of artists are still overpriced by around 30 per cent, estimates Kapil Chopra, editor of Indian e-art magazine Wall, and noting large gallery stockpiles.

The woes of the Indian art world, however, look unlikely to dim enthusiasm for the fair among the public who have flocked to the event, which was launched by 32-year-old marketing graduate Neha Kirpal in 2008.

“The fair has grown exponentially in India, which is a country deprived of seeing art,” said Kirpal, who told AFP she has kept tickets at an affordable 200 rupees ($3.75) below the price of a cinema ticket to “ensure accessibility”.

For collectors and art lovers alike, the fair is regarded as the best chance to get a handle on India's hugely varied art scene from paintings to sculpture, multi-media installations and interactive projects in a country where there are few state-funded museums.

“Every serious collector, scholar and curator makes themselves available for this event, it's an amazing platform,” Amin Jaffer, a leading expert on Asian art at London auction house Christie's, told AFP.

Visitor numbers have risen 10-fold to over 100,000 since the show's launch, while the size of the venue, a huge tent designed by top Indian scenographer Sumant Jayakrishnan - has mushroomed seven-fold.

But critics say increased visitor footfall does not equate to buyers, making it an expensive venture for galleries.

Twenty foreign galleries are present this year, the same tally as in 2012. Key dropouts include Europe's Hauser and Wirth and London's Lisson Gallery, although they have been replaced by others including London's Scream.

“It's a classic case of musical chairs. The foreign galleries are drawn by the hype of the 'Great Indian success story' but then get disappointed because they don't sell,” says Chopra.

The fair has works on offer ranging from an affordable few thousand dollars to $1 million. Experts say India's market is still in its infancy and is far behind that of China. “The Chinese market is much larger and of much longer standing with a highly developed auction house culture and no end to government-endorsed museums,” said Christie's Jaffer.

Fair founder Kirpal insists long-term prospects for the market are bright as India's population grows richer.

“With India's young population, who are increasingly wealthy and well travelled, art is becoming a global contemporary language,” she said.

“In five to 10 years everyone will want to be showcased here.”