New Delhi, Aug. 28 -- India sees the Trump administration's decision to double tariffs on its goods to 50% as "unjustified", people aware of the matter said, adding that while there is still room for negotiations, New Delhi is now prepared to "take all necessary steps" to mitigate the economic impact through export diversification and domestic market expansion. The 25% punitive tariff for purchasing Russian crude oil took effect on Wednesday, adding to an earlier 25% reciprocal tariff to bring total US duties to 50% on goods including garments, electrical parts, gems and jewellery, leather and footwear, furniture, chemicals and marine products. "The tariffs are unjustified and the Indian side's response to the Trump administration's actions has been restrained and responsible," one of these people said, emphasising that contacts between two sides continue with the aim of reaching a trade deal. There was no official reaction to the punitive tariff from the commerce ministry or external affairs ministry on Wednesday. The tariffs put India at a significant disadvantage when compared to export rivals such as Bangladesh, Vietnam and Indonesia - especially on account of textiles. Some exports - estimates range from 30%-40% by value - such as smartphones and pharmaceutical products remain exempted. India characterised the current tensions as a "temporary phase in a long-term relationship" given that trade between the countries is "broadly complementary in nature, contributing to each other's competitiveness and economic growth." However, officials stressed that while negotiations continue, New Delhi will not compromise on protecting farmers, small producers and micro, small and medium enterprises. "We believe issues will be resolved in negotiations but there will be no going back on our red lines," the first person said, echoing PM Narendra Modi's Monday statement that "my government will never let any harm come to small entrepreneurs and farmers." Indian officials questioned the logic of penalising India whilst larger Russian oil purchasers like China face no similar action, calling this "unjustified and unacceptable." "The punitive tariff for buying Russian oil came as a bolt from the blue as it was not part of the terms of reference agreed on by the two sides in April for trade negotiations," a second person said, expressing hope the 25% penalty could be temporary. Officials also highlighted contradictions in US policy, noting that America is penalising India for trading with Russia while the Trump administration seeks to improve relations with President Vladimir Putin and extended a tariff truce for China despite its larger Russian oil purchases. India has developed a comprehensive response strategy including export diversification, short-term relief measures, domestic demand generation and supply chain expansion, the people said. Export diversification measures include leveraging existing free trade agreements with Australia, the United Arab Emirates and Japan, while exploring potential in recently signed FTAs with the European Free Trade Association countries (Iceland, Liechtenstein, Norway and Switzerland) and the United Kingdom. India is also accelerating FTA negotiations with the European Union, Oman, Peru and Chile whilst strengthening supply chains and expanding exports to tariff-light markets such as Europe and the Gulf. "India's merchandise exports are only 2.1% of global trade. Thus, there is ample room to explore other markets through intensive market intelligence efforts," a third person said. Prime Minister Modi's visit to Japan later this week, when an enhanced investment target and economic security initiatives are to be discussed, was also cited as India's attempts to shore up economic and trade ties with other key partners. The people cited above added that the government is considering short-term relief measures for the most affected industries, with the commerce ministry holding meetings with export promotion councils to understand sector-specific issues and formulate responses. "Covid-19 is an example, when the government took prudent policy measures to boost the economy," the third person added. Officials highlighted India's $4 trillion domestic market as a key buffer, pointing to planned GST rate rationalisation next month. Despite trade tensions, institutional contacts continue across multiple areas. "Officials from the defence and foreign ministries held talks under the 2+2 mechanism on Monday, discussing trade and investment, energy security and counter-terrorism," the first person said. External affairs minister S Jaishankar over the weekend identified three main issues affecting India-US ties: trade negotiations, energy purchases from Russia, and US assertions of mediation between India and Pakistan, while setting protection of farmers and small producers as "red lines." The tariffs affect an estimated 55% of India's $87 billion merchandise exports to US, potentially benefiting competitors like Vietnam, Bangladesh and China from the $129 billion bilateral trade relationship that includes a $45.8 billion US deficit. Global Trade Research Initiative founder Ajay Srivastava argued that while the new US tariffs will dent labour-intensive sectors like textiles, jewellery, shrimp, carpets and furniture, most Indian firms can redirect exports to other markets and tap the growing domestic economy....