EMD exemption for MSEs in government tenders: what the rules say

Updated 2026-10-28

EMD (earnest money deposit, also called bid security) is money a buyer holds to make sure bidders don't withdraw. Small businesses often qualify not to pay it.

What the rules say

• GFR 2017, Rule 170: as summarised by the Department of Expenditure, Micro and Small Enterprises (MSEs) and firms registered with the concerned ministry or department are exempted from submitting bid security.
• Department of Expenditure OM, 12 November 2020 (No. F.9/4/2020-PPD): asked ministries to use a Bid Security Declaration instead of bid security, under which a bidder who withdraws or modifies its bid during validity can be suspended for the period stated in the tender. That memo covered tenders issued up to 31 December 2021, and allowed bid security in compelling circumstances with higher approval.

What this means for you

1. Check the bid's EMD detail section: the amount, and whether an exemption is mentioned and for whom.
2. If you're claiming MSE exemption, keep your registration (for example your Udyam certificate) current and upload what the bid asks for — often the certificate covering the item you're quoting.
3. If the bid asks for a Bid Security Declaration, sign and upload it; withdrawing after that can get you suspended.
4. If you're not exempt, work out the cash the bid will lock up — see the EMD and ePBG calculator.

With TendifyAI: the eligibility check reads the bid's EMD and exemption terms and matches them with the registrations in your Knowledge Vault. See tender analysis.

Always check your own bid. Rules change, and every tender can set its own terms. The bid document, its ATC and any corrigendum are what count for your bid.

Sources

• Department of Expenditure OM on Bid Security / EMD (12 Nov 2020)
• General Financial Rules 2017 (ICAR copy)

Related guides

• Read a GeM bid document
• Getting paid on GeM after delivery
• EMD and ePBG calculator