'No Cause For Panic, Trump Tariff Impact Unlikely To Be Severe': Report

There is no cause for panic, say sources, as US tariffs of 50 percent took effect Wednesday on many Indian products, doubling an existing duty as President Donald Trump sought to punish New Delhi for buying Russian oil.

"Do not panic, impact unlikely to be as severe as feared given diversified nature of Indian exports," news agency PTI reported citing sources.

"It is a temporary phase in a long-term relationship," the agency reported.

The development comes hours after US Treasury Secretary Scott Bessent told Fox Business that Trump had good ties with Indian Prime Minister Narendra Modi, hinting that all may not be lost.

"I think at the end of the day, we will come together," Mr Bessent said.

While Trump has slapped fresh duties on allies and competitors alike since returning to the presidency in January, this 50-percent level is among the highest that US trading partners face.

Trump has raised pressure on India over the energy transactions, a key source of revenue for Moscow's war in Ukraine, as part of a campaign to end the conflict.

The United States was India's top export destination in 2024, with shipments worth $87.3 billion. Analysts have cautioned that a 50-percent duty is akin to a trade embargo and is likely to harm smaller firms.

Ajay Sahai, director general of the Federation of Indian Export Organisations, called for "liquidity support from the government."

"We want to ensure that even if business stops, we are able to keep workers on the payroll", he told AFP, saying they were "still optimistic" for  trade negotiations.

India has criticised the levies as "unfair, unjustified and unreasonable".

Economists say that India should use this defining moment to accelerate 'Make in India 2.0', strengthen supply chains, and diversify export markets, and the pain could sow the seeds of long-term gain.

India's GDP is expected to grow between 6.8 per cent and 7 per cent in the first quarter this fiscal (Q1 FY26), due to higher discretionary spending, an SBI Research report had said last week. The gross value added (GVA) growth is estimated at 6.5 per cent for the quarter.