MSE Benefits in Government Tenders: EMD Exemption and Preference

What the MSE policy gives

The Public Procurement Policy for Micro and Small Enterprises Order, 2012 sets an annual target for central ministries, departments and PSUs to buy at least 25% of their goods and services from micro and small enterprises. To help MSEs bid, it provides tender documents free of cost and exemption from EMD for MSEs registered with Udyam (earlier Udyog Aadhaar) or NSIC.

It also gives a purchase preference: when an MSE's price is within 15% of the lowest (L1) bid of a non-MSE, the MSE may be allowed to supply part of the order by matching L1, as the tender specifies. Part of the target is earmarked for MSEs owned by SC/ST and women entrepreneurs.

Where it does not apply

The policy covers goods and services bought by central government buyers. Works contracts, and state government and municipal tenders, follow their own rules; some states have their own MSE policies. The tender's own clauses on exemption decide; quote your Udyam registration and check them before skipping the EMD.

Frequently Asked Questions

Do MSEs need to pay EMD on GeM?

GeM bids state whether EMD applies; MSEs and DPIIT-recognised startups are usually exempt where the buyer seeks exemption under the policy.

Is the MSE exemption available for works tenders?

Not under the central MSE order, which covers goods and services. Some states and departments extend benefits to works; the tender says.

Which registration proves MSE status?

Udyam registration (or NSIC registration for the specific items), valid on the bid date and covering what is being bought.

MSE benefits in tenders

What the MSE policy gives

Where it does not apply

Frequently Asked Questions

Related Terms