Across the country, state governments began taking precautions against the spread of the deadly H5N1 strain of the avian flu that is known to spread to humans.
Maharashtra Chief Minister Vilasrao Deshmukh visited Navapur village of Nandurbar district, some 300 km from Mumbai, where the virus was confirmed. He inspected efforts being made to contain the spread of the disease.
In Andhra Pradesh, the country's largest producer of poultry with a market share of Rs.30 billion ($676 million), over 500 samples taken across the state tested negative.
Tamil Nadu has banned trucks carrying poultry products from Maharashtra, while trucks from other regions were being sprayed with insecticide. Karnataka and Goa sealed their borders with Maharashtra, while Chhattisgarh also issued an alert.
In Jharkhand, the government asked all district hospitals to prepare special wards and the health department was told to set up a help-line to deal with the possible outbreak of bird flu.
Sri Lanka and Nepal banned the import of poultry products, even as a number of India's domestic airlines took chicken and mayonnaise off their menus.
Making a statement in parliament, Agriculture Minister Sharad Pawar said: "A series of strategic actions have been initiated immediately on confirmation of avian influenza. I would like to assure the house and the public that there is no cause for panic.
"I would like to point out that as per WHO recommendations, poultry and poultry products can be safely consumed if cooked to 70 degrees in all parts of the food.
In a separate statement, Health Minister Anbumani Ramadoss said: "We immediately deputed rapid reaction teams to Navapur. They have begun culling operations. The situation is completely under control."
Officials on the spot echoed him.
"The culling process is continuing satisfactorily and is likely to be completed over the next couple of days," T.P. Doke, Maharashtra's director of health services, told IANS over the phone from Navapur.
"We are constantly monitoring the condition of seven people who have been admitted in a local hospital here with mild fever. There is no cause for any alarm yet," he added.
Doke said two relatives of a poultry farm owner from Nandurbar district, who died Friday in a hospital at Surat in Gujarat, had been admitted in an isolated ward of the sub-district hospital as a precautionary measure.
Meanwhile, sale of poultry products, mainly chicken, in major state markets like Mumbai witnessed a sharp drop as cautious buyers preferred to stay away due to bird flu scare.
In Mumbai's crowded Crawford market, poultry traders said their average sales had plummeted by 40 to 60 percent.
"Customers are getting scared by the media reports. We are really worried about the future if this situation continues for long," said Fateh Khan, a small trader.
The poultry trader blamed the central and state governments for not doing enough to allay the fears in the mind of the consumers after India's first confirmed case of the H5N1 case was reported.
The situation was similar in other states.
"Sales have gone down drastically -- by almost 60 percent in just two days," said Umesh Singh, president of the Jharkhand Poultry Association. Most hotels and restaurants have stopped making chicken dishes and switched to mutton, prices of which have increased by about 40 percent.
Known to spread to human beings, the H5N1 strain of bird flu has so far resulted in nearly 100 human casualties across Southeast Asia, mostly in Vietnam. It has been reported in seven countries.
India is the world's sixth largest producer of eggs and the fifth largest producer of broiler chickens. It produced 43 billion eggs and 1.7 billion broilers in 2005, according to industry estimates.
"Multinational vaccine manufacturing and pharmaceutical companies, eager to sell their anti-flu drugs in India, are trying to project it as a case of bird flu," alleged National Egg Coordination Committee (NECC) in a public notice.
"The government and the industry should strongly resist such attempts." The committee appealed to people not to panic and continue to consume eggs and chicken as they were doing earlier.