Skip to content

Independent service. Not a government website.

FindTendersFindTenders
Money | Glossary

EMD (Earnest Money Deposit)

The bid security a bidder deposits with the bid. It is returned to unsuccessful bidders and forfeited if a bidder withdraws during bid validity or, after winning, does not sign the contract or furnish performance security.

What EMD is for

EMD, also called bid security, is money a bidder puts down to show the bid is serious. The buyer holds it while bids are evaluated. If the bidder withdraws or changes the bid during the bid validity period, or wins and then fails to sign the agreement or submit the performance security, the EMD is forfeited.

Central government buyers follow the General Financial Rules (GFR 2017), which put bid security at 2 to 5% of the estimated value of the procurement. State departments and PSUs set their own figure, often a fixed amount. The amount for any tender is stated in its NIT; that figure, not a rule of thumb, is what you pay.

How EMD is paid and returned

On CPPP and the state e-procurement portals EMD is usually paid online (net banking or NEFT/RTGS to the department's account through the portal) or as a demand draft or bank guarantee whose scanned copy is uploaded and the original delivered before bid opening. GeM bids state whether EMD is required and how it is paid.

Unsuccessful bidders' EMD is refunded after the award, without interest. The successful bidder's EMD is either returned once the performance security is received or adjusted against it, as the tender says.

Who does not pay EMD

Micro and small enterprises registered under Udyam (or with NSIC) are exempt from EMD in central government procurement of goods and services under the Public Procurement Policy for MSEs. Works tenders and many state departments follow their own rules, so check the exemption clause of the tender.

Many tenders now accept a Bid Securing Declaration in place of EMD: a signed undertaking that the bidder accepts suspension from future tenders if it withdraws or fails to perform. GeM bids for startups recognised by DPIIT also commonly waive EMD.

Frequently Asked Questions

How much is EMD in a government tender?
Central buyers set bid security at 2 to 5% of the estimated value under GFR 2017; states and PSUs often use their own percentage or a fixed amount. The exact amount is printed in the tender's NIT, and every tender page here shows it.
When is EMD refunded?
For unsuccessful bidders, after the contract is awarded. For the winner, when the performance security is received, or the EMD is adjusted against it. No interest is paid on EMD.
Can an MSE bid without paying EMD?
In central procurement of goods and services, yes: Udyam- or NSIC-registered micro and small enterprises are exempt. For works, and for many state tenders, the tender's own exemption clause decides, so read it before relying on the exemption.

Related Terms

Performance Security / Performance Bank Guarantee (PBG)

Security the winning bidder furnishes after award, usually a bank guarantee, to cover proper performance of the contract. It is returned after the contract, including any warranty or defect liability period, is complete.

NIT (Notice Inviting Tender)

The published notice that announces a tender: the work, estimated cost, EMD, tender fee, eligibility, how to bid and the key dates.

MSE benefits in tenders

Under the Public Procurement Policy for Micro and Small Enterprises, registered MSEs get free tender documents, EMD exemption and a purchase preference in central procurement of goods and services.

Browse all glossary terms