COVID-19: Govt extends deadline for defence contracts for Indian vendors

Multiple acquisition programmes have been affected due to the global pandemic

tejas rajnath bhanu (File) Defence Minister Rajnath Singh after a flight in the Tejas in 2019 | Bhanu Prakash Chandra

In view of the ongoing COVID-19 pandemic, the ministry of defence has extended the delivery period for all existing capital acquisition contracts with the Indian vendors by four months. The ministry believes the measure was needed due to supply chain disruptions arising out of COVID-19 preventive measures.

However, with respect to the foreign vendors, the ministry maintained that they can approach the Indian government, which may consider cases on the basis of the situation prevailing in their respective countries.

Multiple ongoing acquisition programmes from abroad have been affected due to the global pandemic, including delivery of Rafale fighter jets from France. The first lot of Rafale jets, which were scheduled to arrive in India by May, are now expected to come latest by end of July.

According to a statement issued by the ministry, "an order to this effect issued today by the acquisition wing of the ministry, duly approved by the Defence Minister Rajnath Singh, states that the “Force Majeure shall be applicable for a period of four months i.e., 25th March 2020 to 24th July 2020."

It adds that the “Duration of this Force Majeure will be excluded while calculating the delay in delivery of contracted equipment/service and imposition of liquidated damages charges.”

Ministry officials claim that the measure would bring much-needed relief to the domestic defence industry, whose production schedules have been adversely affected by COVID-19 situation.

The MoD order, however, adds that the "Indian vendor is free to deliver the contracted items well within the extended delivery period." Further as per the order, "no separate contract-specific amendments" are required to be made to give effect to this decision, the ministry explained.

Projects like the LCA Tejas are also hit by the pandemic. Hindustan Aeronautics Limited (HAL), the manufactures of Tejas, was under lockdown from March 24 to April 27 due to COVID-19 pandemic and re-opened on April 28. The pandemic has affected the production activity of various programmes, including LCA Tejas programme, according to a senior HAL official.

"Due to the unavoidable lockdown, valuable one month is lost. The supply chain is facing problems. Even subsequent to starting of the operations, the manpower in the divisions was restricted to maintain social distancing," said an HAL official, adding that manufacturing of the detailed parts of LCA Tejas is largely outsourced to many private vendors across India.

"However, many of the vendors have partially started or are in the process of resuming their operations due to lockdown relaxations. The travel restrictions have further heightened the situation. Further, some of the major foreign vendors responsible for supply of line-replaceable units (LRUs) for LCA Tejas are still under lockdown due to COVID-19 pandemic. Since the sea route and the air route are yet to be opened, the items, which were to be shipped to HAL, are also not yet delivered," the official further said.

He added that there will be a significant delay from the suppliers from countries like US, UK and France, which have been severely affected by COVID-19 pandemic and plans for restarting of industries is still not known.

"All this has affected the LCA Tejas programme. However, HAL will make all out efforts to minimise the impact to the extent possible," claimed another official.

HAL had planned to deliver all the 16 Tejas fighters with FOC (final operational clearance) configuration by 2021-22. "HAL is regularly communicating with its partners regarding starting of their operations and their plan for supply of items to HAL. Vendors are yet to communicate their revised schedules. The new timeline can be worked out only after receipt of delivery schedules from various suppliers from within India and aboard," this official added.