Startup benefits in government tenders: EMD, turnover, GeM

If your company is recognised as a startup by DPIIT, central government tenders let you skip the EMD and, on most bids, the prior turnover and experience requirements. These benefits come from their own rules, separate from the MSE benefits, and many founders mix the two up. Like the MSE exemption, none of this is applied automatically. You claim it bid by bid, with your recognition certificate attached.

I get the startup-versus-MSE question often enough that it deserves its own post. Below is who qualifies, what each benefit actually covers, how to claim it on GeM and CPPP, where the limits are, and how it all compares with the MSE route.

Who counts as a startup in government tenders?

Only a DPIIT-recognised startup. The Department of Expenditure’s procurement manuals say a startup has to be recognised by DPIIT to get the benefits, and a 2020 DoE clarification says the turnover and experience relaxation applies “only to all startups recognized by” DPIIT. Being young or small doesn’t qualify you on its own.

The current recognition criteria

DPIIT replaced its 2019 definition with a new notification in February 2026. The Startup India recognition page and DPIIT’s April 2026 startup playbook set the current criteria:

Criterion	Startup	Deep tech startup
Entity type	Private limited company, registered partnership, LLP, or a cooperative society (multi-state or state)	Same
Age	Up to 10 years from incorporation or registration	Up to 20 years
Turnover	Not over ₹200 crore in any financial year since incorporation	Not over ₹300 crore
Activity	Innovation or improvement of products, processes or services, or a scalable model with high employment or wealth potential	Plus heavy R&D spend, novel IP and long development cycles

An entity formed by splitting up or reconstructing an existing business doesn’t qualify.

One wrinkle: the DoE procurement manuals still quote the older ₹100 crore limit. GeM’s terms point to “limits prescribed in the certificate / Start Up scheme of DPIIT,” so go by DPIIT’s current rules and keep your certificate valid.

Benefit 1: EMD exemption under GFR Rule 170(i)

Rule 170(i) of the General Financial Rules, 2017 says bid security is to be taken from every bidder except a few categories. Startups were added to that list by a Department of Expenditure OM dated 25 July 2017, alongside MSEs and firms registered with the Central Purchase Organisation or the concerned ministry. The same rule says bid security should ordinarily be 2 to 5% of the estimated value.

The startup exemption doesn’t depend on MSE status. A recognised startup that has grown past “small” still qualifies.

How the exemption works on GeM

GeM’s General Terms and Conditions (GTC version 1.29, dated 25 March 2026) set the rules for GeM bids:

• No bid security at all on bids or reverse auctions with an estimated value under ₹5 lakh.
• Above ₹5 lakh, startups recognised by DPIIT are exempt if they hold a valid recognition certificate, upload it while bidding and claim the exemption.
• The buyer validates the certificate.
• You must make sure your turnover hasn’t gone past the DPIIT limits in any financial year.

The GTC also says no EMD may be taken from exempt sellers, even through clauses in the bid’s additional terms. Any such clause is null and void.

Works contracts are different for startups

MSE benefits don’t apply to works contracts. The startup exemption does. The DoE’s Manual for Procurement of Works, 2025 says DPIIT-recognised startups are exempt from EMD or bid security, and it applies the turnover and experience relaxation to works as well.

The works manual adds a condition: startup benefits apply only for the industry or sector you’re registered in with DPIIT. Buyers can ask you for a certificate showing that.

Benefit 2: relaxed prior turnover and prior experience

This is the bigger benefit for most young companies. EMD costs you cash for a while. A turnover or experience bar keeps you out of the tender completely.

Where the rule comes from

The DoE first said it in an OM dated 25 July 2016. Central ministries “may relax condition of prior turnover and prior experience in public procurement to all Startups (whether MSEs or otherwise) subject to meeting of quality and technical specifications.” An OM of 20 September 2016 (No. F.20/2/2014-PPD(Pt.)) carried this forward, and the manuals now cite that one.

In 2017 the DoE clarified that the relaxation covers all startups, not just manufacturing. In a 29 June 2020 letter, it confirmed the relaxation applies only to DPIIT-recognised startups. The rule now sits in GFR 2017 Rule 173(i).

”Normally has to be ensured”

The DoE’s Manual for Procurement of Goods, 2024 says the relaxation “is not optional but normally has to be ensured.” The exception is procurement related to public safety, health, critical security operations and equipment, where the buyer has adequate justification. The manual adds that the relaxation can be partial, for example 25% off the specified turnover and experience.

What’s never relaxed

Quality and technical specifications. Every DoE document on this repeats “subject to meeting of quality and technical specifications.” If the tender needs a BIS-certified product, a type-test report or a specific technical capacity, being a startup doesn’t help you.

The startup relaxation lowers the track-record bar. Your product still has to clear every technical specification in the tender.

How to claim startup benefits on GeM and CPPP

Each claim is separate. Treat every bid as starting from zero.

On GeM

1. Register with your DPIIT number. The Startup India procurement page says startups register on GeM using their DPIIT recognition number, the mobile number used for recognition, PAN and Aadhaar. My GeM seller registration guide covers the rest of the setup.
2. Read the bid’s eligibility block. GeM bid documents show the minimum average turnover, the years of past experience, and a separate line: “Startup Exemption for Years Of Experience and Turnover.” That line tells you whether this buyer has given the relaxation.
3. Upload the proof. When the exemption is given, the bid’s terms say a startup is exempted from the turnover and experience criteria, subject to quality and technical specifications, and that a bidder seeking the exemption must upload supporting documents. Upload your DPIIT certificate.
4. Claim the EMD exemption separately. It’s a different claim from the turnover relaxation. Upload the certificate as proof against bid security.
5. Check the preview. Before you submit, confirm the certificate and both claims are actually in the bid.

On CPPP

On the Central Public Procurement Portal, each tender’s own document decides how you claim. Startup India says startups can register on CPPP and get the same EMD, turnover and experience exemptions. In practice:

• Find the EMD clause and the eligibility section in the tender document.
• Check whether the tender wants a signed declaration along with the certificate. Some do.
• Upload the DPIIT certificate wherever the tender lists exemption documents.
• If the tender is silent on startups, raise it in the pre-bid query window and cite Rule 170(i) and Rule 173(i).

Where startup benefits stop

The rules are generous, but they have edges, and buyers do use them.

Critical work can keep the bar

The Delhi High Court tested the exception in Digitech Call System Pvt. Ltd. v. India Post Payments Bank Ltd. (W.P.(C) 15035/2025, decided 17 February 2026). The petitioner, an MSE also recognised as a startup, challenged a GeM bid for contact centre services that kept a ₹50 crore average turnover and heavy experience requirements for everyone.

The bank argued the work was critical, since its contact centre handles customer data and fraud reports around the clock. The court accepted that and dismissed the petition. It held that the tendering authority is best placed to decide what’s critical.

So if a tender says the work is critical, expect the bar to stay. Argue it before bids open, not after you’ve been rejected.

Performance security isn’t covered

The startup sections of the DoE manuals list two supports: the EMD exemption and the turnover and experience relaxation. Nothing there exempts you from performance security, so if you win, budget for the ePBG like any other bidder.

State tenders follow state rules

The Startup India procurement page notes that GFR 2017 applies only to central ministries, departments and their CPSEs. States set their own terms, and the page lists examples:

• Gujarat drops prior experience, turnover, tender fee and EMD for startups.
• Haryana treats startups on par with MSEs.
• Odisha waives EMD for eligible startups and relaxes turnover and experience subject to quality and technical specifications.

On a state tender, read the state’s rules and the tender’s own clause before you assume anything.

Startup vs MSE benefits, side by side

Many companies are both. A young private limited company that manufactures can hold Udyam as a micro enterprise and DPIIT recognition at the same time. Here’s how the two routes compare in central procurement:

	DPIIT-recognised startup	Micro or small enterprise
Proof	DPIIT recognition certificate	Valid Udyam registration
Legal basis	GFR Rules 170(i) and 173(i); DoE OMs of 2016 and 2017	Public Procurement Policy for MSEs Order, 2012; GFR Rule 170(i)
EMD exemption	Yes	Yes
Turnover and experience relaxation	Yes, normally to be given	Yes, buyers may relax it
Purchase preference (L1+15%, up to 25%)	No	Yes
Tender fee exemption	Not in the manuals’ startup list	Yes
Traders	Not addressed; the recognition test is innovation or a scalable model	Excluded
Works contracts	Covered, for your DPIIT-registered sector	Outside the MSE policy
Performance security	Not exempt	Not exempt
How long	Until 10 years, or ₹200 crore turnover	While your Udyam shows micro or small

If you qualify both ways, you can claim both. For the MSE side in detail, including the trader exclusion and Udyam NIC codes, see EMD exemption for MSMEs. For how turnover and experience gates are written in the first place, see tender eligibility criteria explained.

A pre-bid checklist for startups

Run this before you spend a week on any bid.

Check	Where to look	If it fails
Is your DPIIT recognition still valid?	Your certificate and incorporation date	Benefits stop; bid as a regular firm
Is turnover under the DPIIT limit for every year?	Your audited accounts	Don’t claim
Does the bid give the startup turnover and experience exemption?	GeM eligibility block, or the tender’s eligibility section	Meet the criteria or raise a pre-bid query
Does the tender call the work critical, safety or health related?	Scope and general terms	Expect the bar to stay; raise it before bid opening
Can you meet every technical specification?	Technical specs, certifications, test reports	No relaxation covers this
Is it a state tender?	Buyer name and the tender’s rules	Check the state’s startup policy
Is the certificate attached against each claim?	Bid preview	Fix it before you submit

Picture a founder who builds a water-quality sensor, is three years old and has never sold to the government. On a GeM bid with the startup exemption given, the turnover and experience lines don’t apply to that company, and the EMD stays in its bank account. The sensor still has to meet every line of the specification. None of it happens unless you claim it, with the certificate attached, on every bid.