Centre Waives Penalties For Govt Contractors Amid West Asia Crisis

New Delhi: In a major relief for contractors and suppliers holding contracts with government agencies due to the ongoing situation in West Asia, the Center said on Friday that they will not face any penalties if their business is disrupted due to the crisis, according to the finance ministry.

Delays caused by such disruptions will be covered under the “force majeure” provision, which allows assistance in extraordinary circumstances beyond human control, the spending ministry said in a letter. “Force majeure (FM) means extraordinary events such as war or circumstances beyond human control…” the ministry said, adding that such a clause “relieves both parties from contractual liability” when obligations cannot be fulfilled due to such events.

However, this deduction applies to contracts with government bodies for goods, services and works, which includes suppliers, consultants and contractors engaged in public procurement. “Contractors will not face penalties for such delays. As long as the delay is a result of an event included in the IP article, the supplier will not be responsible for the implementation of such a sanction,” the memorandum said.

The Ministry also stated that supplying organizations may resort to force majeure in cases where contracts are affected due to the current situation in West Asia. The Ministry said, “Completion periods of contracts that expire on or after February 28, 2026 may be extended for not less than two months and not more than four months, without any cost or penalty.” he said.