Around a 150 kms from Mandi, this hill resort in the Kangra Valley of northern Himachal Pradesh is the most important town of the district. Surrounded by pine forests, the grand Dhauladhar ranges tower like sheets of rock over Dharamshala. A sleepy little hill town favoured by the British as a summer getaway, Dharamshala's beautiful environs continues to lure visitors. Not just is it hugely popular with honeymooners and holiday makers escaping the heat of the plains, Dharamshala is equally, if not more popular with foreigners in search of the inner peace and tranquility they hope to find in the teachings of the Dalai Lama.

Escaping the Chinese occupation in the late 1950s, thousands of Tibetan refugees found a haven in Dharamshala. The Dalai Lama set up his temporary residence at McLeodganj, the upper town and has continued to stay here as there seems to be no solution to the Chinese occupation of Tibet. The town continues to receive a steady flow of refugees who cross into India from Tibet through Nepal.

The large Tibetan settlement and the official home of the Tibetan Government in Exile has transformed this sleepy Himachali town. In recent times, many western celebrities and Hollywood film stars have come to Dharamshala in search of spiritual guidance and an audience with the Dalai Lama. In McLeodganj, the Tibetans run most of the hotels and restaurants as well as handicrafts shops. Their overwhelming presence and apparent affluence has caused some resentment amongst the locals, who have begun to protest at the loss of opportunities.