The dainty Chinkara gazelle may be the officially recognised state animal of Rajasthan, but it is the ungainly camel that is most commonly associated with the life and lore of India's desert province. But despite the romantic image of a camel ride through the Thar desert – which the Fodor's guide lists as "one of the most unforgettable experiences of a trip to India" – its population is declining dramatically, forcing the provincial government to plan emergency measures to save the hardy animal.

A draft law, which is expected to be passed by the state legislature, will give the camel the same protection as the holy cow – seven years in jail for slaughtering a camel, and three years for smuggling it across state borders. The state dairy will also get into the business of popularising camel milk, which is said to better than cow's milk nutritionally.

The latest camel census has yet to be published, but state officials acknowledge that numbers have fallen steeply, from about 500,000 in 2003 to fewer than 300,000 today.

"The situation is actually much worse," said Hanwant Singh Rathore, director of the League for Pastoral Peoples, which has long campaigned for the camel's protection. "Our estimate of the camel population today is around 200,000."

There are several reasons for the decline. Camels are bred by the Raika, indigenous pastoralists who believe they were entrusted with the task by the god Shiva. But Shiva has not been kind lately and breeding camels has become ever tougher. Grazing lands are disappearing fast, while young Raikas are more interested in urban jobs.

"Raika youth don't revere the animal anymore," said Rathore. "A village near Udaipur which had 10,000 camels a decade ago today has only 500."

Raikas never used to sell female camels, but today they do. As a result, camels are being herded out of Rajasthan in large numbers for the slaughterhouses of Uttar Pradesh and even smuggled into Bangladesh – the meat, it is alleged, is exported to the Gulf, while the skin is sold to leather factories.

But a ban on the export of camels from Rajasthan will create its own problems. "Who will come to Pushkar, the world's biggest camel fair?" asked Rathore.

But with modernisation, camels no longer have the same importance in the state's economy. For instance, the camel carts used for transporting goods and people are being rapidly replaced by mini-vans.

"The only solution is to protect the female camel and popularise its products," said Rathore. His group makes ice-cream from camel milk, paper from the dung and dhurries (rugs) from the wool.