MSMEs seek force majeure relief amid Gulf war disruptions

New Delhi: Small companies that have contracts with the government and public sector units have urged the Centre to invoke force majeure amid increasing disruptions in raw material supplies from overseas due to the Gulf war.

Force majeure is a legal provision applied during extraordinary events such as war that make it difficult to fulfil contractual obligations. Invoking it allows relief from penalties and extends timelines without cancelling contracts.

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The issue was flagged last week at a Service Improvement Group (SIG) meeting reviewing the government's response. Industry executives said the situation mirrored the Covid-19 period, when the Centre treated supply chain disruptions as a natural calamity and allowed force majeure relief on a case-by-case basis.

"Representations have been made by small companies seeking force majeure similar to the Covid years when timelines were extended," said an executive, citing supply chain disruptions linked to the conflict. A government official said suggestions are being examined, adding that timelines and relaxations are being extended wherever feasible.

Companies say exemptions are needed now as alternative supply chains take time to stabilise. The disruptions have hit global shipping routes, raised freight and insurance costs, and strained logistics networks.

To support exporters, India has rolled out a ₹497 crore Resilience & Logistics Intervention for Export Facilitation (RELIEF) scheme, offering higher insurance cover.

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It has also allowed special economic zone units to sell products in the domestic market at a concessional duty for a year.

Goods exports fell 0.81% year-on-year to $36.61 billion in February.

The RBI has extended the enhanced export credit period of up to 450 days until June 30.

Industry has also sought curbs on retrospective war-risk surcharges by shipping lines and flagged sector-specific issues. Container train operators have sought waivers on charges such as stabling and empty wagon haulage, while air cargo operators have asked for relief on stranded shipments.