Section 21(4) of the CLRA Act,1970 imposes vicarious liability on the Principal Employer for payment of wages to contract labor engaged by him. It includes the obligation of payment of wages not less than the statutory minimum wages also. Therefore, the reasons cited in your post as defense is quite untenable and the PE, particularly being a Government department, can not approve of any tender quoting lesser amount comprising of wages falling short of the statutory minimum rates of wages during the currency of such a contract.
This problem is existing every where but mostly to those are having closed contract. Where the contract is signed for longer period having the escalation clause in contract to cope-up with such problem. To tackle such issues you have to put a separate clause in LOI or Work Order issued to the contractor.
In each contract there remains clause to reimburse the cost, if it goes substantial high than the rate quoted or any new imposition of tax & duties shall be also applicable.
Therefore, you need to discuss the matter with principal employer for change in contract or put the clause.