BELLEVUE, Wash. – Expedia Inc., the world’s largest online travel agency with more than $17 billion in annual gross travel bookings, plans to grow even larger early next year when it establishes operations in India.

Sharat Dhall, managing director of Expedia’s yet-to-be launched India subsidiary, confirmed in mid-October that the company will launch a Web portal specifically for Indians. The announcement put an end to several years of speculation about when – or if – Expedia would enter India.

“We will be starting our own Web site in India shortly,” Dhall said in a statement. “We have the strength of our international experience and exposure. Based on that, we will build our Indian operations with a long-term view.”

Himanshu Singh, managing director of Travelocity.com India Pvt. Ltd., the Mumbai-based subsidiary of Travelocity.com LP, Expedia’s largest competitor, responded to the news by essentially challenging Expedia to “bring it on.”

“More competition, more fun,” Singh told the Indian press.

Bellevue-based Expedia appointed Dhall to head up the division in late June, a little over one month after he resigned as director of e-commerce at Times Internet Ltd. The latter is the online arm of Indian media conglomerate Bennett, Coleman & Co. Ltd., which publishes the English daily newspaper The Times of India. Prior to joining Times Internet Ltd in early 2006, Dhall spent 14 years at Indian consumer-products giant Hindustan Lever Ltd., where he managed the company’s charitable initiative for rural India.

In recent years, Expedia has quietly taken steps toward establishing a Web site specifically for the Indian market. The company registered the Web domain name “expedia.in” on Feb. 16, 2005, according to CheckDomain.com, a Web site that allows anyone to look up, purchase, register and monitor Web domain names and addresses. The “.in” extension is a country code reserved specifically for Indian Web sites.

In October 2006, Expedia announced that it was looking for someone to head up its planned India operations, and shortly thereafter the company opened an office in the northern Indian city of Gurgaon. But the company remained silent on its plans for the country until Dhall’s recent statement.

Expedia books airline tickets, hotel reservations, car rentals, cruises, vacation packages and various other attractions and services over the Internet and through telephone travel agents. Aside from the United States, the company also serves customers in Australia, Canada, France, Germany, Italy, Japan, the Netherlands, Norway, Spain, Sweden, the United Kingdom and New Zealand.

Originally founded as a business unit of Microsoft Corp. in 1995, the company was spun off in 1999 and acquired by New York-based media group IAC/InterActiveCorp – then known as USA Networks. InterActiveCorp spun off its travel group of businesses under the Expedia brand in August 2005.

Expedia’s portfolio of brands includes Hotels.com, discount travel site Hotwire.com and travel search engine TripAdvisor. The company also holds a 52-percent stake in eLong Inc., an online travel agency headquartered in Beijing.

Expedia’s plans for the online travel sector in India – which is crowded with struggling start-ups – coincide with the recent consolidation of South Lake, Texas-based Travelocity.com LP. The privately held outfit, which began booking hotel rooms in India just last March, plans to begin selling airline tickets in December – one month before Expedia.

They’ll be competing for sales in the surging Indian travel market against homegrown companies MakeMyTrip India Pvt. Ltd., Yatra Online Pvt. Ltd. and Ezeego One Travel & Tours Pvt. Ltd.

“We are very much aware of the challenges, including existing players, less Internet penetration and broadband connectivity,” Dhall said. “But timing and pricing are going to be critical factors.”

Online travel planning in India has grown phenomenally in recent years, and the trend shows no signs of abating. According to a 2006 report on India’s online travel sector by PhoCusWrite Inc., a Sherman, Conn.-based firm that tracks the worldwide travel industry, online leisure and unmanaged business travel gross bookings in India reached approximately $295 million in 2005. The firm predicted those figures would grow sevenfold by 2008, to $2 billion.

The long-term outlook is even brighter. Euromonitor International Inc., a Chicago-based global market-research firm, predicts that India will be Asia’s fastest-growing market for online travel retail by 2010, with Internet-based travel retail transactions among Indians soaring 271 percent between 2005 and 2010.