The Centre has recognised the ongoing West Asia situation as a Force Majeure event, allowing extension of contractual timelines by two to four months without penalties in cases where supply chain disruptions have affected execution of government contracts.
According to an Office Memorandum issued by the Ministry of Finance’s Department of Expenditure on April 29, procuring entities may invoke Force Majeure for contracts impacted directly or consequentially by disruptions linked to the prevailing West Asia situation.
Notably, the clarification follows representations made by all the major industry bodies to the Ministry of Finance regarding supply chain disruptions affecting the drone sector.
As per the memorandum, the ongoing West Asia situation should be treated as “war” for the purpose of invoking Force Majeure provisions under government procurement rules.
Consequently, contractual obligations due on or after February 28, 2026, may be extended for a period ranging between two and four months without imposition of penalties or additional costs.
Case-by-case basis
The extension period will be determined by procuring entities on a case-by-case basis after examining the admissibility of Force Majeure claims.
Besides, the memorandum stated that delays in delivery or completion arising from Force Majeure events should not attract liquidated damages or denial clauses where suppliers, contractors, consultants, or service providers are not at fault.
However, invocation of Force Majeure will be considered valid only where parties to the contract were not already in default of their obligations as of February 27, 2026.
Furthermore, the memorandum also clarified that relief would apply only to non-performance directly attributable to disruptions arising from the West Asia situation.
Industry reactions
On their part, Industry stakeholders said the clarification acknowledges challenges faced by sectors dealing with component shortages, logistics delays and export restrictions.
Additionally Drone Federation India’s President Smit Shah said the government’s decision to permit invocation of Force Majeure in light of the ongoing West Asia situation is a timely step for the drone and defence manufacturing ecosystem.
The industry, Shah said, has been dealing with component shortages, logistics delays and tighter export controls over recent months, affecting delivery timelines.
In addition, he said that the move provides greater predictability for manufacturers while supporting efforts to build a resilient and self-reliant drone ecosystem.
Published on May 1, 2026