MSME Benefits in Government Tenders: Your Complete Guide

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

The 25% Procurement Mandate

Under the Public Procurement Policy for MSMEs, government departments must procure 25% of their annual procurement from MSMEs. Out of this, 4% is reserved for SC/ST entrepreneurs and 3% for women entrepreneurs.

Key MSME Benefits

• EMD Exemption: MSMEs registered with NSIC are exempt from Earnest Money Deposit
• Tender Fee Waiver: Often waived for registered MSMEs
• Prior Turnover Relaxation: No prior turnover requirement in many cases
• Prior Experience Relaxation: Reduced experience requirements
• Purchase Preference: MSMEs within 15% of L1 price are given preference
• GeM Catalog Priority: MSME products get visibility preference on GeM

How to Get MSME Registration

1. Visit the Udyam Registration Portal (udyamregistration.gov.in)
2. Enter your Aadhaar number and verify OTP
3. Fill business details: name, type, NIC code, investment, and turnover
4. Submit — registration is free and instant
5. Download your Udyam Registration Certificate

MSME Classification (2020 Revised)

• Micro: Investment up to ₹1 Crore, Turnover up to ₹5 Crore
• Small: Investment up to ₹10 Crore, Turnover up to ₹50 Crore
• Medium: Investment up to ₹50 Crore, Turnover up to ₹250 Crore