---
title: Bid security declaration vs EMD: what it is and when it applies · TrackTender
description: What a bid security declaration is, when it replaces EMD, whether MSEs must sign it, what the format says, and the suspension you face if you break it.
canonical: https://tracktender.com/blog/bid-security-declaration-vs-emd/
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# Bid security declaration vs EMD: what it is and when it applies

> What a bid security declaration is, when it replaces EMD, whether MSEs must sign it, what the format says, and the suspension you face if you break it.

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- Bid security declaration vs EMD: what it is and when it applies

 Policy & benefits

- EMD
- MSME
- Policy

# Bid security declaration vs EMD: what it is and when it applies

What a bid security declaration is, when it replaces EMD, whether MSEs must sign it, what the format says, and the suspension you face if you break it.

KSKetul Shah20 October 2026
· 12 min read

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 The short version

A bid security declaration (BSD) is a signed undertaking you give in place of EMD. GFR 2017 Rule 170(iii) lets central ministries and departments accept it instead of a deposit.

In this guide
- [What is a bid security declaration?](#what-is-a-bid-security-declaration)
- [BSD vs EMD vs ePBG: what’s the difference?](#bsd-vs-emd-vs-epbg-whats-the-difference)
- [When does a tender use a BSD instead of EMD?](#when-does-a-tender-use-a-bsd-instead-of-emd)
- [Does GeM use the bid security declaration?](#does-gem-use-the-bid-security-declaration)
- [Do MSEs and startups have to sign a BSD?](#do-mses-and-startups-have-to-sign-a-bsd)
- [What does a bid security declaration format say?](#what-does-a-bid-security-declaration-format-say)
- [What happens if you break a bid security declaration?](#what-happens-if-you-break-a-bid-security-declaration)
- [Do state government tenders use BSDs?](#do-state-government-tenders-use-bsds)
- [A quick check before you bid](#a-quick-check-before-you-bid)
- [Frequently asked questions](#faq)

 Key takeaways
- A bid security declaration (BSD) is a signed undertaking you give in place of EMD. GFR 2017 Rule 170(iii) lets central ministries and departments accept it instead of a deposit.
- You pay nothing, but you promise not to withdraw or modify your bid during its validity, and to sign the contract and furnish performance security on time if you win.
- Break it and the penalty is suspension from bidding with that buyer for the period the tender sets. Real formats name periods such as 12 months or 2 years. The DoE debarment guidelines also list failure to abide by a BSD as a ground for debarment of up to two years.
- An MSE exemption from EMD doesn't excuse you from a BSD. Tenders can, and some do, require every bidder to sign one, MSEs and startups included.
- A BSD replaces bid security only. If you win, the performance security (ePBG or PBG) is still due.

A bid security declaration is a signed promise you give instead of paying EMD. You deposit nothing. In return you accept that if you back out of your bid, or win and then fail to sign the contract or furnish performance security, the buyer can suspend you from its tenders for a set period.

That makes it the cheaper option on day one and the more expensive one if you break it. A forfeited EMD costs you one deposit. A suspension can cost you every tender that buyer publishes for a year or two. So here’s where the BSD comes from, when a tender uses it, who has to sign it, and what you’re actually signing.

## What is a bid security declaration?

Bid security exists to stop a bidder from walking away. GFR 2017 Rule 170(i) says it’s there “to safeguard against a bidder’s withdrawing or altering its bid during the bid validity period”. EMD does that with money. The declaration does it with a promise and a penalty.

### The rule behind it

Rule 170(iii) of the [General Financial Rules, 2017](https://doe.gov.in/files/circulars_document/GFRupdatedupto31012026.pdf) gives central ministries and departments the option. In place of bid security, they “may require Bidders to sign a Bid securing declaration”. The bidder accepts that it will be suspended if it:

- Withdraws or modifies its bid during the period of validity, or

- Is awarded the contract and fails to sign the contract, or

- Is awarded the contract and fails to submit a performance security before the deadline in the bid document.

The suspension lasts “for the period of time specified in the request for bids document”, and it bars you from bidding for contracts “with the entity that invited the Bids”. It isn’t a ban across all of government.

### Same job as EMD

The Department of Expenditure’s procurement manuals treat the two as one family. The [Manual for Procurement of Goods (2024)](https://doe.gov.in/files/manuals_documents/Goods.pdf) defines “Bid security” as “‘Earnest Money Deposit’ (EMD), or ‘Bid Security Declaration’”. Its job is to secure your obligations from the bid, including signing the contract and providing performance security once your bid is accepted.

## BSD vs EMD vs ePBG: what’s the difference?

These three get mixed up constantly, because they show up in the same section of a tender. Two of them secure your bid. The third secures the contract once you’ve won.

EMD (bid security)Bid security declarationePBG / performance security
StageSubmitted with the bidSubmitted with the bidAfter award, by the winner only
What you giveMoney or an instrument: online payment, DD, FDR, banker’s cheque, bank guarantee, insurance surety bondA signed undertakingBank guarantee (ePBG on GeM) or another accepted form
Typical size2–5% of estimated value under GFR; 0.5–5% on GeM, 1% recommendedNil3–5% for goods and services under GFR; up to 5% on GeM
If you break itDeposit forfeitedSuspension from bidding with that buyerForfeited in whole or part for non-performance
RuleGFR Rule 170(i)GFR Rule 170(iii)GFR Rule 171

Sources for the numbers: GFR Rules 170 and 171, and GeM’s [General Terms and Conditions, version 1.29 of 25 March 2026](https://www.iiserbpr.ac.in/uploads/file_upload/GeM%20Latest%20Guidelines%20Mar%202026.pdf). If you want the wider glossary, I covered [EMD, ePBG, MII and MSE](/blog/emd-epbg-mii-mse-tender-terms/) in one place.

### What a BSD doesn’t replace

A BSD stands in for bid security only. If you win, the performance security is still due in full. On GeM, the GTC gives the seller 15 days from award to submit it, and payments only become due after the buyer receives and verifies it. Budget for that before you bid, even on a tender where the bid stage cost you nothing.

## When does a tender use a BSD instead of EMD?

It’s the buyer’s choice, made tender by tender. The tender document tells you which one applies, usually in the EMD or bid security clause.

### The 2020 push, and when it ended

On 12 November 2020, the Department of Expenditure issued [Office Memorandum No. F.9/4/2020-PPD](https://doe.gov.in/files/circulars_document/Bid_Security_Earnest_Money_Deposit.pdf). It cited the financial crunch contractors faced during the pandemic and told ministries that bid documents should carry only a bid security declaration, with no bid security provision at all.

Asking for EMD needed approval from the next higher authority, or the Secretary, whichever was lower. The OM covered goods, consultancy, works and non-consulting services, but only for tenders issued until 31 December 2021. Since then, the default has gone back to the GFR text: EMD unless the buyer chooses a BSD.

### The rule today

The Goods Manual (2024) and the [Manual for Procurement of Works (2025)](https://doe.gov.in/files/manuals_documents/Works_Manual_SE_2025.pdf) say the same thing. Procuring entities, “after seeking approval from the competent authority, may consider asking Bidders to submit a Bid securing declaration (BSD)” in place of bid security.

So a BSD tender is one where the officer got that approval and wrote it into the bid. You can’t opt for a BSD on a tender that asks for EMD.

### Where you’ll actually meet one

SituationWhat to expectSource
Central tender with a BSD clauseSigned BSD in the format the tender gives; no EMDGFR Rule 170(iii)
Central tender asking for EMDPay EMD, or claim an exemption you qualify forGFR Rule 170(i)
GeM bid under ₹5 lakhNo bid security at allGeM GTC v1.29, clause (m)
GeM Push Button ProcurementNo EMD; participation against a BSD onlyGeM GTC v1.29, PBP clause
GeM bid where the buyer’s ATC asks for a BSDBSD in the buyer’s attached format, sometimes from every bidderBid ATC, e.g. GEM/2025/B/6817831
State government tenderThe state’s own rules and the tender decideState finance department orders

## Does GeM use the bid security declaration?

Yes, in two ways.

### Push Button Procurement

The GTC’s Push Button Procurement (PBP) route is for bids with an estimated all-inclusive value up to ₹5 lakh. It says plainly: “PBP participation will be without EMD and against Bid Securing Declaration only.” A seller can take part in a PBP notice only once, with no option to withdraw, and the declaration is the only bid security the buyer holds.

### Buyer-added terms on regular bids

On a normal GeM bid, the buyer can write a BSD requirement into its additional terms and conditions (ATC). Bid GEM/2025/B/6817831, corrigendum 3 dated 7 November 2025, is one example. It says “there shall be no requirement of paying EMD against this tender”, but every bidder must submit a bid security declaration “in lieu of EMD” in the format at Annexure D of the buyer’s ATC.

### If you break a GeM bid commitment

The GTC lets GeM debar a seller whose bid security is forfeited, for a minimum of three months on a first offence, with longer periods for repeat offences. That clause is written around forfeited bid security. On a BSD bid, read the declaration itself for the period you’re agreeing to. GeM’s incident and suspension machinery has its own rules, which I covered in [GeM incident management and suspension](/blog/gem-incident-management-suspension/).

## Do MSEs and startups have to sign a BSD?

The EMD exemption and the declaration are separate obligations, and mixing them up is how exempt suppliers lose bids.

GFR Rule 170(i) exempts micro and small enterprises and DPIIT-recognised startups from furnishing bid security. That’s the deposit. A buyer that wants a signed declaration from everyone can still ask for one, and the exemption doesn’t cover you.

The GeM bid above is explicit about it: “The requirement of submission of Bid Security declaration shall also be applicable on bidders who are exempted from payment of EMD (MSME and Startups).” Picture a supplier who claims the MSE exemption correctly, attaches a valid Udyam certificate, and skips the declaration because “we’re exempt anyway”. On a bid with that clause, the bid is incomplete.

Your MSE exemption lets you skip the deposit. It doesn’t let you skip the promise.

### Works tenders are different again

The Works Manual (2025) lists DPIIT-recognised startups as exempt from EMD but doesn’t extend that to MSEs, because works sit outside the MSE procurement policy. On a works tender, an MSE should expect EMD or a BSD like any other bidder. The full exemption rules are in [how to claim the EMD exemption for MSMEs](/blog/emd-exemption-msme-how-to-claim/).

## What does a bid security declaration format say?

There’s no single national form. Each tender attaches its own, usually as an annexure, and you use that one. The wording tracks GFR Rule 170(iii) closely.

### A typical format

A [BSD annexure](https://www.hcikl.gov.in/pdf/tender/Bid_Security_Declaration.pdf) published by the High Commission of India in Kuala Lumpur is a fair example. It’s titled “Bids Securing Declaration”, goes on company letterhead, and the core text reads:

“I/We accept that if I/we withdraw or modify Bids during the period of validity or if I/we are awarded the contract and I/we fail to sign the contract, or to submit a performance security before the deadline defined in the request for bids document, I/we will be suspended for the period of 2 years from being eligible to submit Bids for contracts with the entity that invited the Bids.”

It closes with the date, name and signature.

### What to check before you sign

Formats vary in the details that matter. State Bank of India’s [format for a housekeeping tender](https://sbi.co.in/webfiles/uploads/files_2122/14102021_FORMAT%20OF%20BID%20SECURITY%20DECLARATION.pdf) sets disqualification at 12 months, not 2 years. It also says the declaration stops being valid once you’re notified of the winner, if you lost, or 30 days after your bid validity expires, whichever comes first.

Read every format for:

- The suspension period. It’s whatever the tender says; 12 months and 2 years are both in use.

- The triggers: withdrawal, modification, refusal to sign, failure to furnish performance security. Some formats add “impairs or derogates from the tender”.

- Who it binds: usually “the entity that invited the Bids”, not every government buyer.

- When it lapses. Some formats say so; GFR Rule 170(iii) doesn’t.

- Signature and upload. The Goods Manual says a self-attested scan of the original BSD should be uploaded with the bid, and bids that don’t comply “shall be rejected”.

## What happens if you break a bid security declaration?

The first consequence is the one you signed up to: suspension from bidding with that buyer for the stated period. There’s no deposit to forfeit, so the penalty lands on your future pipeline instead.

### Code of Integrity and debarment

The Goods Manual (2024) treats a BSD breach as a “violation of Code on Integrity” leading to suspension for the period in the BSD. The Works Manual (2025) uses the word “debarred” for the same thing.

The DoE debarment guidelines in both manuals go further. They list “failure to abide by ‘Bid Securing Declaration’” among the grounds on which a ministry or department can debar a firm, for up to two years, after giving it a chance to respond. A ministry-level debarment applies across that ministry’s attached offices, autonomous bodies and CPSEs.

### How to stay on the right side of it

Before you submit, be sure you can hold your price for the full bid validity period, that you can sign on the buyer’s terms, and that you can raise the performance security in time if you win. If any of those is doubtful, it’s safer not to bid than to sign and pull out. And if you win and can’t perform, deal with it in writing with the buyer, citing the clause, before the deadline passes.

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## Do state government tenders use BSDs?

Some do, under their own orders rather than the GFR. GFR 2017 applies to central ministries, departments, and attached and subordinate bodies, so a state buyer follows its own financial rules.

Odisha is one sourced example. Its Finance Department [Office Memorandum No. 8943/F of 18 March 2021](https://finance.odisha.gov.in/sites/default/files/finance_circulars/8943.pdf) mirrored the central OM. Bid documents were to carry only a bid security declaration, with bid security needing the next higher authority’s approval. The order covered goods, consultancy, non-consultancy services and works, and applied to tenders issued until 31 December 2021.

It also kept Odisha’s own EMD exemptions: MSEs as defined in the Odisha MSME Development Policy, 2016, and startups under the Odisha Start-ups Policy, 2016. For any other state, read the tender and the state’s finance department orders before assuming the central rules carry over.

## A quick check before you bid

QuestionWhere to lookWhat to do
EMD or BSD?EMD / bid security clause, ATCFollow what the tender asks; you can’t swap one for the other
Is a BSD required even if you’re exempt?ATC and annexure listIf yes, sign it alongside your exemption claim
What’s the suspension period?The BSD formatNote it; make sure you can live with it
Can you hold your price for the full validity?Bid validity clauseIf not, don’t bid
Can you raise performance security in time?Performance security clauseLine up the bank guarantee before you bid
Is the signed scan in the bid?Bid previewFix it before you submit

Once the tender is decided, a BSD leaves you nothing to chase, unlike a deposit stuck in [the EMD refund process](/blog/emd-refund-process/). Your working capital stays with you, and what you owe the buyer is the promise you signed.

## Frequently asked questions

What is a bid security declaration in a tender?

It's a signed statement a bidder submits instead of paying EMD. Under GFR 2017 Rule 170(iii), the bidder accepts that if it withdraws or modifies its bid during the validity period, or wins and fails to sign the contract or submit performance security by the deadline, it will be suspended from bidding with that buyer for the period the tender specifies.

Is a bid security declaration the same as EMD?

No. Both secure your bid, and the DoE procurement manuals define bid security to include either. EMD is money or a bank instrument the buyer can forfeit. A BSD costs nothing upfront, and breaking it costs you a suspension from future bids with that buyer instead of a forfeited deposit.

Do MSEs have to submit a bid security declaration?

If the tender asks for it, yes. The MSE exemption under GFR Rule 170(i) covers bid security, meaning the deposit. A buyer can still require a signed declaration from every bidder. One GeM bid, GEM/2025/B/6817831, states that the BSD requirement applies to bidders exempted from EMD, MSMEs and startups included.

What happens if you violate a bid security declaration?

You can be suspended from submitting bids to the buyer that invited the tender for the period written in the declaration. The DoE Manual for Procurement of Goods 2024 treats it as a violation of the Code of Integrity, and the debarment guidelines list failure to abide by a BSD among the grounds on which a ministry can debar a firm for up to two years.

Does GeM accept a bid security declaration?

Yes, in some cases. GeM's GTC version 1.29 says Push Button Procurement participation is without EMD and against a bid securing declaration only. On regular GeM bids, the buyer can ask for a BSD in the bid's additional terms, usually with its own format attached.

KS

Written by Ketul Shah

Ketul Shah is the founder of TrackTender and Anekant AI. He works with Indian SMEs that bid on government contracts and writes about GeM, e-procurement and how smaller suppliers can compete and win.

[More about TrackTender →](/about/)

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