Racial tension has erupted in South Africa's KwaZulu-Natal province after an Indian-origin municipal officer was stabbed, with the Indian community living in 'fear of retaliation.'

The Indian community in the town of Greytown, about 150 km northwest of Durban, has been forced to take precautions including remaining indoors and keeping their business shut.

"We are being told that our shops are going to be burnt down. Our safety is not guaranteed as we fear retaliation," a local businessman said on condition of anonymity.

"It is a great pity that the death had become a racial issue," said Zokhe Chonco, a leader of the African community in Durban.