IT Hardware Suppliers' Request for Force Majeure Advisories in India

IT hardware suppliers in India are seeking government intervention to issue force majeure advisories on the public procurement of electronics, including desktops, laptops, servers, and storage systems. This request arises due to significant price hikes and supply constraints of essential components like memory, storage, and processors.

Issues Facing Suppliers

• Suppliers are struggling with soaring component costs while the prices were fixed at the time of bidding.
• Major manufacturers such as Samsung and Micron have announced contract price hikes of 71-270% for memory and storage modules.
• Procurement lead times have increased by 52-104 weeks, causing inflation in core components.

Industry Requests

• The industry urges the government to coordinate with the Department of Expenditure and other entities for time-bound procurement relief.
• They suggest including price variation clauses in IT hardware tenders linked to global benchmarks.
• Requests include permitting shorter bid-validity periods with price revalidation and allowing controlled price updates beyond volatility thresholds.

Impact on Contracts

• Extended lead times and allocation-based supply of CPUs and storage may lead to delivery delays and compromised quality.
• Long bid validity periods and rigid technical specifications are becoming impractical under current volatility.

Industry Representation

The All India Small IT and Electronics Manufacturers Association (AISIE) and the Manufacturers Association of Information Technology (MAIT) have both sent communications to the Ministry of Electronics and Information Technology (MeitY) regarding these issues.