EMD Requirements in Government Tenders Explained

Written by Nadim Hamza, Senior Procurement Analyst · Last updated: June 2026

What is Earnest Money Deposit (EMD)?

Earnest Money Deposit (EMD), also called Bid Security, is a refundable deposit that bidders must submit along with their tender to demonstrate seriousness. It protects the buyer against bidders withdrawing their bids after submission or refusing to accept contracts if awarded.

Typical EMD Amounts

• Standard Range: 1% to 5% of the estimated tender value
• GeM Bids: Usually 1% to 3% of the bid value
• Large Infrastructure: Can be 2-5% of estimated cost
• Small Value Tenders: Some tenders below ₹10 Lakhs may waive EMD entirely

MSME EMD Exemptions

This is one of the biggest advantages for MSMEs in government procurement:

• MSMEs registered under Udyam Registration are exempt from EMD on GeM
• Startups recognized by DPIIT may also be exempt
• Instead of EMD, a Bid Securing Declaration may be accepted
• This frees up working capital that can be used for project execution

Forms of EMD Accepted

• Demand Draft (DD)
• Fixed Deposit Receipt (FDR)
• Bank Guarantee (BG)
• Online Payment (on GeM and e-procurement portals)
• Bid Securing Declaration (for exempt categories)

EMD Refund Process

EMD is refunded to unsuccessful bidders within 30 days of contract award. For the successful bidder, EMD is adjusted against the Performance Security or refunded after Performance Security submission.

Pro Tip: Use tenderflowpro.in to automatically extract EMD amounts and submission requirements from tender documents, so you can plan your cash flow accordingly.