NEW DELHI : The finance ministry said on Wednesday that contractors who face delays in supplying goods to government under various public procurement programmes due to the coronavirus threat will not face any penalty for such delays.

The expenditure department in the ministry communicated the decision to all other departments saying that supplies to government facing such delays due to “spread of coronavirus in China or any other country" will be covered by the ‘force majeure’ clause that deals with extraordinary circumstances beyond human control. The examples include war, strike and riots but not negligence or seasonal rains. The force majure clause frees both the parties to a contract from their obligations without penalty or negative consequences. “It is clarified that it should be considered as a case of natural calamity and the force majeure clause may be invoked wherever appropriate following the due procedure," said the communication from the finance ministry.

Finance minister Nirmala Sitharaman had on Tuesday met industry executives to assess the supply chain disruption due to the threat of coronavirus. Wednesday’s decision follows a request from industry executives. “This would avoid imposition of penalties and other negative consequences on the companies executing government contracts who may be dependent on supplies from affected areas. This will provide relief to those companies actually affected by such disruptions having Central Government contracts," a government official said explaining the decision.

Sitharaman had on Tuesday said that manufacturers who depend on raw materials from China, were worried that their stocks were being held at Indian ports because necessary paperwork was not coming from China. On Wednsday, federal policy think tank NITI Aayog held a meeting with executives from the pharmaceutical industry to assess the disruption in supplies of active pharmaceutical ingredients (APIs), the key component used in manufacturing medicines.

The meeting was chaired by NITI Aayog chief executive officer Amitabh Kant, who in a tweet described the interaction as "Fruitful, constructive and positive."

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