What Is EMD in a GeM Tender? Complete Guide to EMD, Exemption, Submission & Refund

Earnest Money Deposit, commonly called EMD, is an important term that sellers frequently encounter while participating in Government e-Marketplace (GeM) tenders.

EMD is also referred to as Bid Security.

Its primary purpose is to safeguard the buyer's interest during the bidding process and discourage bidders from submitting non-serious offers or withdrawing from their commitments without valid reason.

However, EMD is not automatically required in every GeM tender.

The seller should always check the specific bid document to confirm:

• Whether EMD is required
• EMD amount
• Accepted payment or security mode
• Applicable exemption
• Required validity
• Submission deadline
• Buyer details
• Conditions under which EMD may be forfeited

This guide explains EMD in GeM from a seller and Government contractor's perspective.

EMD stands for Earnest Money Deposit.

In GeM procurement, EMD functions as Bid Security submitted by a bidder in accordance with the conditions of a particular tender.

The purpose of EMD is to provide financial assurance that the bidder is genuinely interested in the procurement opportunity and will honour the commitments made during the bidding process.

EMD should not be confused with Performance Security.

EMD relates primarily to the bidding stage, while Performance Security generally relates to successful performance of the contract after award.

EMD helps protect the buyer during the tender process.

It can discourage:

• Non-serious bidding
• Withdrawal after bid submission
• Refusal to honour the quoted offer
• Failure to comply with bid commitments
• Other conduct covered by the tender's forfeiture conditions

For the seller, EMD should therefore be treated as part of tender planning rather than as a routine document upload.

Before submitting EMD, confirm that your organisation is technically eligible, commercially prepared and capable of executing the contract if selected.

No.

EMD is not automatically required in every GeM tender.

The requirement depends on the procurement, applicable GeM rules and the conditions selected or specified by the buyer.

On an individual GeM bid, sellers should look for the section titled:

EMD Detail / EMD विवरण

This section normally indicates whether EMD is:

• Required, or
• Not Required

If EMD is required, the bid document should be checked for the amount, mode, validity and any applicable exemption conditions.

Never assume that EMD is required simply because the tender value is high, and never assume that it is exempt merely because your organisation has MSME or Startup registration.

Before participating in a GeM tender, open the complete bid document and locate the EMD section.

Check the following:

1. Is EMD required?
2. What is the EMD amount?
3. What form of EMD is accepted?
4. In whose favour should it be issued?
5. What validity period is required?
6. Is physical submission also required?
7. What is the submission deadline?
8. Is an exemption available?
9. What supporting documents are required for exemption?
10. Are there any Buyer Added Terms and Conditions affecting EMD?

Keep a copy of the bid document and corrigenda used while preparing the security.

There is no single fixed EMD amount that applies to every GeM tender.

The amount should be checked in the specific tender.

Older published GeM General Terms indicated that, for applicable bids, buyers could specify an EMD within a prescribed percentage range of the estimated procurement value.

However, sellers should not calculate or assume the current EMD amount using an old percentage rule.

The exact amount displayed in the live GeM bid document should be treated as the controlling requirement for that tender.

Depending on the bid document and applicable GeM conditions, Bid Security / EMD may be accepted through instruments such as:

• Insurance Surety Bond
• Account Payee Demand Draft
• Fixed Deposit Receipt
• Banker's Cheque
• Bank Guarantee
• e-Bank Guarantee
• Online payment in an acceptable form

The exact accepted mode should always be verified from the specific GeM bid.

Do not prepare an FDR, Bank Guarantee or Demand Draft merely because the same instrument was accepted in another tender.

Yes, where the relevant GeM bid and applicable terms permit Fixed Deposit Receipt (FDR) as an acceptable form of Bid Security.

Before preparing an FDR, verify:

• Beneficiary name
• EMD amount
• Required validity
• Whether lien or pledge wording is required
• Whether original FDR must be submitted
• Whether a scanned copy must be uploaded
• Delivery address
• Deadline for physical submission

A small mistake in beneficiary name, amount or validity can create a compliance problem.

Yes, where the bid permits a Bank Guarantee or e-Bank Guarantee.

Before requesting the bank to issue the guarantee, verify:

• Exact beneficiary
• Required amount
• Validity period
• Claim period, if specified
• Prescribed format
• Bank eligibility
• Required stamping
• Bid number
• Whether physical submission is required
• Whether online/e-BG verification is required

The Bank Guarantee should follow the exact bid requirement rather than a generic company format.

EMD exemption means that an otherwise eligible bidder may not be required to furnish the Bid Security amount when the bidder satisfies an exemption specifically permitted under the applicable GeM terms and the individual bid.

An exemption should never be claimed merely by selecting an option without supporting eligibility.

The seller should confirm:

• The organisation falls within an eligible exemption category
• The exemption applies to the relevant product or service
• Required credentials are validated
• Supporting documents are current
• The tender has not specifically restricted or modified the exemption under an applicable procurement framework

Eligible Micro and Small Enterprises may receive EMD exemption in applicable GeM procurements, subject to the conditions of the bid and the applicable GeM rules.

However, MSME registration alone should not automatically be treated as a universal exemption.

The bidder should verify:

• Whether the enterprise qualifies as a Micro or Small Enterprise
• Whether it is the manufacturer/service provider for the relevant primary category where required
• Whether its credentials are properly validated
• Whether the specific bid recognises the exemption
• Whether any special procurement conditions override the normal exemption

Always read the current bid document before claiming exemption.

DPIIT-recognised Startups have historically been included among EMD-exempt categories under GeM's published terms.

However, a Startup should still verify the current tender conditions before claiming exemption.

The bidder should ensure that:

• Startup recognition is valid
• Registration details match the GeM seller entity
• Required supporting evidence is available
• The individual tender permits the exemption

Do not assume that Udyam/MSME or Startup recognition automatically provides EMD exemption in every Government procurement.

Certain tenders may operate under special procurement frameworks or financing conditions.

For example, special terms applicable to certain World Bank-financed procurement on GeM expressly state that preferences or exemptions for bid security may not apply.

Always check:

Bid Conditions

• GeM GTC
• Applicable STC
• Buyer ATC
• Special procurement conditions

before claiming exemption.

Where the tender permits EMD exemption, the bidder should follow the process shown on the GeM portal and provide the required supporting credentials.

A practical checklist is:

1. Open the EMD section of the bid.
2. Confirm that exemption is permitted.
3. Identify the exemption category.
4. Verify that your entity genuinely qualifies.
5. Check that Udyam / Startup / other credentials match the GeM seller.
6. Upload supporting documents where required.
7. Make the required declaration or confirmation.
8. Review the bid before final submission.

Never upload an unrelated certificate simply to bypass the EMD requirement.

EMD validity is the period for which the Bid Security instrument must remain enforceable.

The required validity should be taken directly from the tender document.

When using an FDR, Bank Guarantee, Insurance Surety Bond or similar security, verify the validity carefully before submission.

Do not confuse:

• Bid validity
• EMD validity
• Performance Security validity
• Claim period

These may represent different requirements.

If the EMD instrument does not satisfy the validity specified in the tender, the bid may be treated as non-compliant depending on the applicable bid conditions.

Before uploading or dispatching the security, compare:

Required validity vs. Actual validity written on the instrument

Also verify the amount, beneficiary, instrument number and issuing bank details.

This check should be completed before final bid submission.

Yes. Bid Security may be subject to forfeiture when the circumstances specified in the tender or applicable procurement terms occur.

Possible situations can include conduct such as:

• Withdrawal of the bid during the applicable validity period
• Refusal to honour the submitted offer
• Failure to comply with post-selection obligations
• Failure to furnish required Performance Security
• Other events specifically covered by the bid conditions

The actual forfeiture conditions should always be read from the applicable tender and GeM terms.

Do not rely on a generic list when evaluating financial risk.

For manpower outsourcing, security, housekeeping, facility-management and similar service contractors, EMD affects more than tender documentation.

It also affects working capital.

A contractor may simultaneously have money blocked in:

• EMD
• Performance Security / ePBG
• Salary payments
• EPF contributions
• ESIC contributions
• GST
• Uniforms
• Equipment
• Employee mobilisation
• Outstanding Government invoices

Therefore, every tender should be evaluated for both profitability and cash-flow requirements.

A tender that looks commercially attractive may still create financial stress if security deposits and working-capital requirements are ignored.

Before participating in a tender, calculate:

EMD Amount

• Bank / FDR / Guarantee Charges
• Opportunity Cost of Blocked Funds
• Performance Security Requirement
• Initial Mobilisation Cost
• Payroll Working Capital = Tender Financial Commitment

For example:

If a company participates in several tenders simultaneously, separate EMD amounts may tie up working capital even before any contract is awarded.

Tender planning should therefore consider available banking limits, cash reserves and likely contract mobilisation requirements.

EMD and ePBG serve different stages of procurement.

Always check the individual bid because both requirements can vary.

EMD is normally released or returned in accordance with the applicable procurement conditions after the relevant bidding process reaches the stage specified by the tender rules.

The exact timing can differ between:

• Unsuccessful bidders
• Successful bidder
• Cancelled tender
• Tender re-bid
• Bid withdrawal or disqualification scenarios

For the successful bidder, release may also be linked to fulfilment of post-award requirements such as Performance Security, where applicable.

Sellers should check the individual tender conditions and maintain proof of the EMD instrument until release is confirmed.

If the tender process is complete but your EMD has not been returned or released, first verify:

1. Tender status
2. Contract award status
3. EMD instrument details
4. Whether you were successful or unsuccessful
5. Whether Performance Security was required
6. Whether any forfeiture issue exists
7. Whether the original security was submitted physically
8. Buyer office details
9. Any acknowledgement of receipt

Then contact the buyer through the appropriate official channel with:

• GeM Bid Number
• Tender details
• Seller name
• EMD amount
• Instrument number
• Instrument date
• Bank details
• Proof of submission
• Request for release / return

Maintain written correspondence rather than relying only on telephone follow-up.

Common EMD mistakes include:

1. Assuming MSME exemption without checking eligibility
2. Preparing the wrong amount
3. Wrong beneficiary name
4. Insufficient validity
5. Using an instrument not accepted by the bid
6. Missing physical-submission requirement
7. Uploading an unreadable scanned copy
8. Missing the EMD submission deadline
9. Using an expired exemption certificate
10. Claiming exemption for an unrelated category
11. Ignoring Buyer Added Terms
12. Ignoring corrigenda
13. Confusing EMD with Performance Security
14. Not keeping acknowledgement of original EMD submission
15. Forgetting to follow up for release after tender completion

Before submitting a GeM bid, confirm:

✅ EMD required / not required checked
✅ EMD amount verified
✅ Exemption eligibility verified
✅ Correct exemption document uploaded
✅ Correct instrument type used
✅ Beneficiary name verified
✅ Bid number verified
✅ Amount verified
✅ Validity verified
✅ Prescribed format used
✅ Online upload completed
✅ Physical submission requirement checked
✅ Deadline checked
✅ Corrigendum checked
✅ Copy of EMD retained
✅ Dispatch / acknowledgement proof retained

EMD is only one part of the Government tender lifecycle.

Contractors may also need to track:

Tender → EMD → Bid Submission → Award → Performance Security / ePBG → Contract → Employee Deployment → Attendance → Payroll → EPF & ESIC → Compliance → Billing → Receivables → Contract Profitability

DhirekOne is designed to help Government contractors and service providers bring these connected operations into one workflow.

For manpower, security, housekeeping, facility management and other service contracts, this helps businesses maintain better visibility from tender stage through contract execution.

Q1. What is the full form of EMD? EMD stands for Earnest Money Deposit. In Government procurement it is also commonly referred to as Bid Security.

Q2. What is EMD in a GeM tender? EMD is a Bid Security that may be required from bidders to protect the buyer's interest during the tender process.

Q3. Is EMD mandatory in every GeM bid? No. The individual bid document should be checked to determine whether EMD is required.

Q4. Is EMD always 1% in GeM? No universal percentage should be assumed. Sellers should use the exact EMD amount specified in the current GeM tender.

Q5. Are MSMEs exempt from EMD? Eligible Micro and Small Enterprises may receive EMD exemption in applicable tenders, subject to GeM rules, category eligibility, credential validation and the conditions of the specific bid.

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### Q6. Are DPIIT Startups exempt from EMD?

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Recognised Startups have historically been included among EMD-exempt categories under GeM terms, but sellers should verify the current tender before claiming exemption.
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### Q7. Can EMD be submitted through FDR?

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Yes, where Fixed Deposit Receipt is permitted by the applicable tender conditions.
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### Q8. Can EMD be submitted through Bank Guarantee?

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Yes, where the bid permits a Bank Guarantee or e-Bank Guarantee as Bid Security.
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### Q9. What is the difference between EMD and ePBG?

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EMD primarily secures the bidding process, while ePBG or Performance Security primarily secures performance of the awarded contract.
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### Q10. Can EMD be forfeited?

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Yes. EMD may be forfeited in circumstances specified by the applicable tender and procurement conditions, such as certain failures to honour the bidder's commitments.

Q11. Is EMD returned to unsuccessful bidders?
EMD is generally released or returned according to the applicable tender conditions after the relevant procurement stage is completed, unless a forfeiture condition applies.

Q12. Where should I check the EMD requirement?
Check the EMD Detail section of the GeM bid document along with the applicable GTC, STC, Buyer Added Terms and corrigenda.

Conclusion

EMD, or Earnest Money Deposit, is a form of Bid Security that may be required when participating in a GeM tender.

Before submitting a bid, sellers should verify whether EMD is required, the exact amount, accepted instrument, validity, beneficiary details, exemption eligibility and submission deadline.

Do not assume that every tender requires EMD, that EMD is always a fixed percentage, or that every MSME or Startup automatically receives exemption.

The individual GeM bid document, applicable procurement terms and any corrigenda should always be reviewed before submission.

For Government contractors, EMD should also be considered as part of the wider financial planning for a tender because Bid Security, Performance Security, mobilisation costs and payroll working capital can all affect contract cash flow.

DhirekOne helps contractors manage the broader tender-to-contract lifecycle, including tender tracking, contract operations, manpower, payroll, statutory compliance, billing and receivables.