A few weeks ago, there were reports that said the West Asia war and the resultant supply chain disruptions have impacted the delivery of F404 engines by General Electric for the Light Combat Aircraft (LCA) Tejas Mk1A. Reports also suggested that drone manufacturers and other defence firms that are dependent on important components, especially from Israel, have been facing delivery delays.
It now appears that defence and other contractors supplying components and systems to government entities can heave a sigh of relief, at least for a few months, as the finance ministry has invoked a Force Majeure (FM) clause to grant them an extension for up to four months. The department of expenditure under the finance ministry invoked the clause in a memorandum issued on April 29.
A Force Majeure (FM) clause applies when a company or government agency cannot fulfil a contract because of extraordinary events beyond its control, such as an event described as an act of god (like a natural calamity) or events such as a war, strike, riots, crimes (but not including negligence or wrong- doing, predictable/seasonal rain and any other events specifically excluded in the clause).
When the FM clause is invoked, both parties are temporarily protected from penalties or legal liability for delays. However, the affected company must inform the other side within a reasonable time (14 days in this case) and cannot claim Force Majeure after the event has already passed.
It is to be noted that the FM clause does not entirely excuse a party's non-performance but only suspends it for the duration of the FM.
"If the performance in whole or in part or any obligation under this contract is prevented or delayed by any reason of FM for a period exceeding 90 (ninety) days, either party may, at its option, seek to terminate it," the notification from the finance ministry said.
The government has now clarified that the ongoing West Asia conflict will be treated as a “war” event under Force Majeure rules. This means government agencies can grant relief in contracts affected by the conflict, including delays in defence supplies, services, or construction work.
"While the term 'War' is defined as an event triggering Force Majeure as stated above, for ample clarity it is to reiterate that the ongoing West Asia situation should be treated as war. In cases where disruptions arising from the prevailing West Asia situation have directly affected, or consequentially impacted contractual obligations (for goods and services contracts, construction/ works contracts with Government Agencies), the procuring entities may invoke Force Majeure," the notification reads.
The date for completion of contractual obligations, which had to be completed on or after February 28, 2026, may be extended for a period of not less than two months and not more than four months without imposition of any cost or penalty on the contractor, according to the notification.
The period of extension (between two and four months) may be decided by the procuring entity after due examination on a case-by-case basis.
However, Force Majeure can only be invoked if the company was not already in default as of February 27, 2026. The relief also applies only to delays directly caused by disruptions linked to the West Asia conflict.
"It may be noted that all contractual obligations shall revive upon completion of the period," the notification said.
Drone industry hails the move
The drone industry welcomed the decision, with Drone Federation India president Smit Shah saying the government has done the right thing by recognising the situation in the West Asia war as a Force Majeure.
He observed that many Indian drone companies have government contracts, and because of the ongoing conflict in West Asia, their supplies and deliveries have been badly affected. "They were worried about heavy penalties for delays that were not even their fault."
He said in a social media post, "This circular from the Ministry of Finance now clearly states that if your contract was disrupted because of the West Asia situation, you will receive an additional 2 to 4 months of time, and no fine will be imposed on you. Fair and practical. We at the Drone Federation India welcome this decision."
