At the Happy Valley estate, where large painted signs boast of providing organic tea to Harrods, it was unnaturally quiet. Usually at this time of year – midway through the second flush, or crop – these steep hillsides of densely planted bushes would be filled with women plucking the leaves and dropping them into woven baskets on their backs.

Instead, they sit inside their small, sheet-metal shacks, idling away the damp afternoon.

Across the Darjeeling hills, life has come to a standstill. An indefinite strike, or "bandh", called last week by activists demanding a separate state, has closed down schools, roads, businesses, hotels and – crucially – the tea estates. As a result, the day labourers who earn just 53 rupees (66p) a day picking tea to be sold to well-heeled customers in London's Knightsbridge, are currently getting nothing.

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Yet – remarkably, in view of the hardship they are enduring – these workers support the strike and its goals. Most of them are ethnic Gorkhas and believe the creation of Gorkhaland will transform their lives. "Suffering falls on you when you cannot work," said one tea picker, a 30-year-old woman, bouncing a baby on her knee. "But everything will change if we get Gorkhaland. We will get good jobs, education, everything."

The demand for a Gorkha state – but one that would remain firmly part of India – is nothing new. Two decades ago these steeply forested valleys, around which the mist can wrap itself for days, were awash with separatist violence and a counter-insurgency operation that killed at least 1,200 people before a ceasefire was brokered. Now, having turned their backs on violence, a Gorkha political party formed two years ago, the Gorkha Janmukti Morcha (GJM), says it is using tactics pioneered by Mahatma Gandhi to try and secure its goals. The GJM's green, yellow and white flags can be seen flying from homes and buildings across the hills, or else painted onto walls alongside slogans demanding a homeland.

The agitation for a separate state has both an economic and social basis. Ever since independence, say activists, the Darjeeling region has been overlooked by the West Bengal state government in Kolkata. There are not enough schools, not enough hospitals and insufficient development. Darjeeling, once known as the Queen of the Hills, is now a shabbily-dressed commoner, suffering from broken roads and a crumbling infrastructure. It is a terrible irony that in one of the wettest parts of India there is a severe shortage of water. Every day people use plastic containers to collect water from tankers and broken pipes.

Beyond the economic factors, there is an issue of identity. The Gorkhas, who can be found from Nepal across a swathe of northern India, say they suffer intense discrimination from other Indians.

"Whenever we go anywhere like Delhi or Mumbai, people think we're foreigners. They think we are from Nepal," said Anuphang Subha, who owns a business in the town. "If we have Gorkhaland, people will know we are from India."

The drive for Gorkhaland is being led by Bimal Gurung, a former "hard man" who formed the GJM after falling out with another Gorkha leader who had led the separatist movement for the previous three decades. He is known as a passionate speaker, capable of rousing a crowd.

One morning last week, Mr Gurung spoke in front of hundreds gathered in a large hall at the town's Gymkhana Club. The Club was built 100 years ago by the British, who established Darjeeling as a summer retreat and tea-producing area in the mid-19th century. The event was to launch the publication of a booklet, Why Gorkhaland?

It was also Mr Gurung's birthday, and before his speech supporters queued to place silk scarves around his neck – a traditional gesture of respect. Such was the length of the queue that one of Mr Gurung's aides had to stand behind him removing the scarves to make space for new ones to be placed around his neck.

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The GJM leader had previously said he would publicly shoot himself if he failed to achieve a separate state by March 2010. On this morning, however, he asked the audience for patience. That deadline "was my vision. We are technically working towards achieving Gorkhaland within that period," he said. "However, there would be some delay, or maybe it could be achieved earlier also. Even God can make mistakes. I am just a human being."

The crowd cheered and clapped. One elegant, grey-haired woman in a green sari, named Moni Mukia, approached to explain why Bimal Gurung was their "saviour".

"A schoolgirl produced a poster spelling out his first name," said the enthusiastic wife of a retired tea planter. "B is for brave, I is for intelligent, M is for merciful, A is for aggressive, L is for liberator."

In an interview, Mr Gurung said the strike was designed to force the politicians in Delhi to take notice. The federal government had agreed to another round of three-way talks with the GJM and officials from West Bengal next month, but he said he wanted quicker action. Asked whether the strike – enforced by GJM supporters who have set up roadblocks across the hills while the police remain inside their buildings – was legal, he responded that "It is beside the point whether it is legal or not legal. We are doing what we need to do."

Mr Gurung is aware that one of the key levers at his disposal is to put pressure on the region's 87 tea estates, many owned by wealthy, well-connected individuals based in Kolkata. The estates support almost half of the region's 1.6 million residents and the dilemma for the GJM is that by preventing day labourers from working the strikes have a severe impact on some of the poorest members of the community.

"I feel both sympathy and anger," said Ashok Lohia, who owns several estates including the famed Chamong tea gardens. "If you want to work in the area, you have to get on with the local guys. At the same time, you don't want to lose money" because of the strikes, he said.

Not everyone agrees with the GJM or its tactics. There are whispers and grumbles about the impact on the local economy, about how tourists have been kept away, and about the need to obtain permits from the GJM to travel out of town for such necessities as a hospital visit. Few who live in the town choose to voice these views publicly, and some say that those who speak out are threatened.

"The GJM are not thinking of the public. People are suffering," said Jeevan Sharma, a photographic shop owner and one of the few in Darjeeling willing to vent his frustration. "But if you speak against them, their people threaten you. I think it's just a game with the government so that they can demand money."

However, the GJM does have the backing of one national party. At the general election held earlier this year, rather than putting up its own candidate, the separatists threw their support behind that of the right-wing Bharatiya Janata Party (BJP), after it backed their demand for a new state. Its candidate, Jaswant Singh, a former foreign minister with a polished-crystal accent, won by a landslide.

"All the hill people, from the north-east to Jammu and Kashmir, have their own state. Why discriminate against the Gorkhas?" said Mr Singh. "All they are asking for is a say in their own social and political destiny."

That view appears to be commonly shared among the people of Darjeeling, whether or not they are actively involved in the struggle for Gorkhaland. One evening last week, on the veranda outside the Planters' Club – another relic of the colonial era, where the pelts of leopards shot long ago still hang from the wall – members sat looking out across the valley.

There was no tea to be had, as the strike had shut down the restaurant and bar. The members recalled how Darjeeling was once famed for its sanatorium, and how the roads were washed so regularly that British "ladies" could walk in their gowns along the town's famous Mall without fear of dirtying their clothes. These days, the town's basic hospital struggles to manage, and many of the roads are filthy. "Darjeeling has been in decline since the 1960s. The area has been badly neglected," said Amargit Dhir, a retired estate manager. "There is no other option but to revolt. This is the start of revolution."