No price relief for tech firms, but Centre extends contract timelines

Subscribe to enjoy similar stories.NEW DELHI: India’s electronics companies are getting more time, but not price revisions, to execute government procurement contracts as geopolitical conflicts and supply-chain disruptions raise costs for suppliers of smartphones, tablets and laptops.In a 29 April notice, the department of expenditure in the finance ministry said global economic and supply-chain disruptions triggered by the Iran conflict and preceding geopolitical tensions qualify as force majeure, allowing companies executing government contracts to seek delivery extensions of up to four months without penalty.The move offers some relief to companies such as Acer, Lava and Samsung India, which had sought price revisions for ongoing contracts amid rising component and logistics costs but have so far failed to secure them. Instead, the Centre has allowed extensions of “not less than two months and not more than four months.”The order said the Centre “recognizes delays in delivery in completion of contractual obligations on account of force majeure event for which the supplier, consultant, service provider and contractor is not at fault.

In such cases the delivery period needs to be re-fixed without imposing any penalty on the supplier.”Companies can seek exemptions for both the direct and indirect impact of current global disruptions, according to the order, a copy of which Mint has seen.Government contracts are a significant source of business for electronics firms in India. Analysts estimate that companies such as Acer, Lava, and Samsung derive as much as 15% of their annual revenue from public procurement programmes.India’s smartphone, tablet and laptop markets together generate more than $55 billion in annual revenue,