New Delhi: In a big relief to drone firms and defence sector, the Indian government has invoked ‘force majeure’ in contracts disrupted by the West Asia crisis. The drone industry has welcomed the government’ decision to grant deadline extensions and waive penalties in view of the ongoing crises.
President of Drone Federation India, Smit Shah said that the government’s move to treat the situation as force majeure was a ‘right’ step, as many drone companies executing government contracts have faced delays due to the conflict. Taking to his X handle, he said, ” The Government has done right thing by recognizing the situation in the West Asia was a Force Majeure, meaning an emergency beyond anyone’s control.”
“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,” stated an official memorandum dated April 29th. Acts like 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 have all been covered under the order.
To be precise, the relief is available only on cases where contractors were not already in default ever since the war began and only for nonperformance directly attributable to disruptions caused by the West Asia war. The final decision will ultimately be taken by the procuring entity following a detailed review.
A period of 14 days has been issued, within which the firms must notify the occurrence, if the services remain disrupted beyond 90 days, both parties hold the power to terminate the contract.
According to industry experts, the disruption may last much longer than 4 months. As per the current situation, delivery timelines for critical components such as computing modules and cameras have doubled from three months to six months projecting a sharp rise in prices. Specialized processors used in drones have become 215% more expensive with a significant rise seen in communication equipment by 50%.
What is Force Majeure? How is it Beneficial?
Force Majeure is a legal provision that excuses a firm from meeting deadlines when extraordinary situations such as war, natural disasters, or other unforeseen crises prevail. Under the relief package, government agencies, can grant delivery extensions of two to four months.
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