EMD Exemption for MSME and Startups: Rules, Eligibility & Process in GeM Tenders

The EMD requirement is made by government departments as a form of security so as to ensure that only real and sincere bidders take part in the bid process. It also helps the buyer avoid fraudulent bidders. The GeM portal provides a number of advantages for the MSMEs and Startups such as tender fee and EMD exemption.

In this guide, we explain everything about MSME exemption for EMD, Startups and other categories in GeM Tenders, including rules, circulars, eligibility criteria, and practical tips to help you bid successfully.

EMD exemption on GeM - Categories

On Government e Marketplace, Bid Security (EMD) is generally 1% of the estimated value, with buyers allowed to set it between 0.5% and 5%. It must remain valid for 45 days beyond bid validity and no interest is payable on EMD. The seller categories which get the EMD exemption on GeM are:

• MSEs/Udyam Registered Sellers

  Manufacturers of the provided product/service will be exempted by presenting the valid Udyam Registration certificate or MSME EMD exemption certificate along with relevant documents while bidding. The validity of credentials required is done online through the Udyam portal. EMD exemption for MSME can be limited to the state in question, using ATC by the state buyer. Otherwise, MSME exemption for EMD is applicable for all states.

• Start-ups Recognized by DPIIT

  A start-up registered with the Department for Promotion of Industry and Internal Trade (DPIIT) will get EMD exemption on GeM by uploading a valid Startup Recognition Certificate while Tender Bidding. It is also essential that the turnover limitations follow the criteria set by DPIIT, and documents are validated by the buyer.

• Government Sponsored Organizations

  Entities like KVIC, All India Handicrafts Board ACASH, WDO, Coir Board, TRIFED, and Kendriya Bhandar will be exempted by providing registration / authorization certification of the entity in question.

• Vendor Assessment Certified Vendors

  A vendor whose credentials are verified by an approved vendor assessment agency for the primary product / service will be exempted by providing the relevant VA/VAE report certification while bidding.

• BIS License Holder Sellers

  Sellers having a valid license issued by the Bureau of Indian Standards for the main product category shall be exempted by uploading BIS license with supporting documents to be validated through BIS portal by the buyer.

• Central/State PSUs

  GeM EMD exemption is applicable for sellers having valid registration certificate or evidence as a PSU either at the Central or State level.

• Sellers Registered with Designated Agency

  Sellers who have registered with the designated agency as mentioned in the bid documents are eligible for GeM tender EMD exemption by uploading a valid registration certificate instead of EMD document during the bid process.

  The exempted sellers cannot be asked to submit EMD, even through ATC/STC clauses, such conditions are null and void. The State entities may require EMD exemption for MSMEs if clearly specified in bid terms. The standard exemption rules remain applicable If not mentioned.

Benefits of MSME Exemption for EMD and Startups on GeM

The exemption benefits of EMD for eligible seller categories are:

• No Initial Cost – MSMEs and Startups may participate in the tendering process without locking their working capital into EMD amounts.
• Efficient Management of Finances – Money can be invested in other processes such as manufacturing, production, and implementation.
• Encourages Wider Participation – There is more participation from smaller entities in the tender process.
• Startup Growth – Encourages startups and supports their growth and development.
• National Growth Initiatives – Aligns with government initiatives like Make in India.

Process for EMD Exemption for MSME in GeM

The sellers exempted need to follow the below process for claiming the exemption benefits.

1. Login on Portal - Log in on the GeM Portal with the username.
2. Download EMD Draft - The seller can download the EMD Draft document with Bid number for participation.
3. Select Exemption Criteria - The vendor has to select the EMD Exempt category as Yes if eligible for the EMD exemption on GeM or otherwise NO.
4. Choose Category - If yes, then the bidder needs to choose the EMD Exemption category and supporting document.
5. Upload Documents - The vendor has to upload the documents such as Experience Criteria, Bidder Turnover, Certificate (Requested In ATC), OEM Authorization Certificate.
6. Review Details - The seller can review the details like Advisory Bank, EMD percentage, EMD amount, ePBG Required. The Vendor submits the request for GeM EMD exemption.
7. Verify and Submit - Complete the verification and submit the application

The vendor can know more about the EMD by visiting the EMD in Tender Guide.

GeM EMD Exemption - Common Mistakes

There are some common mistakes that a vendor needs to avoid to ensure the GeM tender EMD exemption for MSMEs becomes successful.

• Matching Category - The product or service offered by the vendor falls under the tender category. Otherwise, it may lead to rejection.
• Active Registration - The MSME registration must be kept valid throughout.
• Tender Requirements - Tender documents must be read thoroughly to fulfill all the conditions that might prevent vendors from seeking exemption.
• Upload Proper Documents - Document uploaded should contain accurate information.
• Expired Certificates - Expired certificates should not be used to apply for exemption.

TendersPlus provides expert guidance in the GeM Registration, Vendor Assessment, EMD exemption process, and Bid submission. Our expert guidance increases the chances of winning the GeM Tenders with proper documentation. The vendors can call us at call +91 9279921887 or write at contact@tendersplus.com to start GeM Journey now!