Centre allows force majeure in West Asia-hit contracts, offers up to 4-month relief

NEW DELHI: The Centre has allowed contractors to invoke force majeure in government contracts disrupted by the West Asia crisis, granting deadline extensions of up to four months without penalties.

In an office memorandum dated 29 April, the Department of Expenditure, under the finance ministry, said disruptions arising from the prevailing situation in West Asia may be treated as a valid force majeure event, provided they have directly or consequentially affected contractual obligations.

The order applies to procurement of goods, services and works across government agencies, offering relief to firms facing supply chain disruptions, logistics bottlenecks and input delays linked to the crisis.

Contracts with completion deadlines on or after 28 February 2026 may be extended by a minimum of two months and up to four months, without imposition of any cost or penalty, as per the order. The final decision on the extension period will be taken by the procuring entity after examining claims on a case-by-case basis.

The government has clarified that such relief will be available only in cases where contractors were not already in default as of 27 February 2026, and only for non-performance directly attributable to disruptions caused by the prevailing West Asia situation.

Firms invoking the clause must notify the occurrence within a reasonable period, not later than 14 days of its occurrence, and such claims cannot be made retrospectively. If the disruption continues for more than 90 days, either party may choose to terminate the contract without financial repercussions.

The government hsaid the current situation should be treated as a war-like event for the purpose of invoking force majeure.

The conflict in West Asia escalated on 28 February after coordinated US and Israeli military strikes on Iran triggered retaliatory attacks, disrupting trade routes, shipping schedules and supply chains, particularly for sectors reliant on imports and cross-border logistics.

“West Asia is critical for India’s economy, particularly for energy security and trade flows." said Amit Singh, associate professor at the Special Centre for National Security Studies, Jawaharlal Nehru University.

“A large share of India’s crude oil and gas imports comes from the region, and key shipping routes such as the Strait of Hormuz and the Red Sea are vital for the movement of goods. Any disruption there tends to push up costs, delay supplies and add to inflationary pressures. The region is also important for remittances, given the large Indian workforce employed there,” Singh added.