NEW DELHI: The Center has allowed contractors to invoke force majeure in government contracts marred by the crisis in West Asia, granting a deadline extension of up to four months without penalty.
In an office memorandum dated April 29, the Ministry of Expenditure under the Ministry of Finance said that disruptions arising from the prevailing situation in West Asia could be considered a valid force majeure event provided they directly or subsequently affected treaty obligations.
The regulation applies to the procurement of goods, services and works across government agencies and offers assistance to businesses facing supply chain disruptions, logistical bottlenecks and input delays related to the crisis.
Contracts with a completion date of February 28, 2026 or later can be extended by a minimum of two months to four months, depending on the order, without any cost or penalty. The final decision on the extension of the deadline will be made by the contracting authority after assessing the claims on a case-by-case basis.
The government has clarified that such relief will only be available where suppliers were not already in default by 27 February 2026 and only in the event of default directly attributable to disruptions caused by the prevailing situation in West Asia.
Companies applying the clause must notify the event within a reasonable period of time, no later than 14 days after its occurrence, and such claims cannot be applied retroactively. If the interruption lasts more than 90 days, either party may choose to terminate the contract without financial consequences.
The government said the current situation should be considered a war-like event for the purpose of invoking force majeure.
The conflict in West Asia escalated on February 28 after coordinated US and Israeli military strikes on Iran prompted retaliatory attacks and disrupted trade routes, shipping plans and supply chains, particularly for sectors dependent on imports and cross-border logistics.
“West Asia is critical to India’s economy, especially for energy security and trade flows.” said Amit Singh, associate professor at the Special Center for National Security Studies, Jawaharlal Nehru University.
“A large share of India’s oil and gas imports come from the region, and key shipping lanes such as the Strait of Hormuz and the Red Sea are vital for the movement of goods. Any disruption there tends to raise costs, delay supplies and increase inflationary pressures. The region is also important for remittances, given the large Indian workforce employed there,” Singh added.
