--- title: Startup benefits in government tenders: EMD, turnover, GeM · TrackTender description: What DPIIT-recognised startups get in government tenders: EMD exemption, relaxed turnover and experience, Startup Runway, and how it differs from MSE benefits. canonical: https://tracktender.com/blog/startup-benefits-government-tenders/ source: https://tracktender.com/blog/startup-benefits-government-tenders/ --- # Startup benefits in government tenders: EMD, turnover, GeM > What DPIIT-recognised startups get in government tenders: EMD exemption, relaxed turnover and experience, Startup Runway, and how it differs from MSE benefits. - [Blog](/blog/) / - Startup benefits in government tenders: EMD, turnover, GeM Policy & benefits - Policy - Eligibility - GeM # Startup benefits in government tenders: EMD, turnover, GeM What DPIIT-recognised startups get in government tenders: EMD exemption, relaxed turnover and experience, Startup Runway, and how it differs from MSE benefits. KSKetul Shah20 October 2026 · 10 min read Copied The short version DPIIT-recognised startups are exempt from EMD in central government tenders under GFR Rule 170(i), as amended on 25 July 2017. The exemption is separate from the MSE route, so a startup doesn't need to be a micro or small enterprise to claim it. In this guide - [Who counts as a startup in government tenders?](#who-counts-as-a-startup-in-government-tenders) - [Benefit 1: EMD exemption under GFR Rule 170(i)](#benefit-1-emd-exemption-under-gfr-rule-170i) - [Benefit 2: relaxed prior turnover and prior experience](#benefit-2-relaxed-prior-turnover-and-prior-experience) - [How to claim startup benefits on GeM and CPPP](#how-to-claim-startup-benefits-on-gem-and-cppp) - [Where startup benefits stop](#where-startup-benefits-stop) - [Startup vs MSE benefits, side by side](#startup-vs-mse-benefits-side-by-side) - [A pre-bid checklist for startups](#a-pre-bid-checklist-for-startups) - [Frequently asked questions](#faq) Key takeaways - DPIIT-recognised startups are exempt from EMD in central government tenders under GFR Rule 170(i), as amended on 25 July 2017. The exemption is separate from the MSE route, so a startup doesn't need to be a micro or small enterprise to claim it. - Buyers may relax prior turnover and prior experience for recognised startups under Rule 173(i) and the Department of Expenditure's OM of 20 September 2016. Quality and technical specifications are never relaxed. - The DoE manuals say the turnover and experience relaxation should normally be given, unless the item involves public safety, health or critical security operations and the buyer can justify refusing it. - Unlike the MSE benefits, the startup benefits reach works contracts too. Startups don't get the MSE purchase preference, and states set their own rules. - Nothing is applied for you. On GeM, upload the DPIIT certificate when you claim the EMD exemption and check the bid's 'Startup Exemption' field before you count on the turnover relaxation. 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](https://www.startupindia.gov.in/content/sih/en/startupgov/startup_recognition_page.html) and DPIIT’s April 2026 startup playbook set the current criteria: CriterionStartupDeep tech startup Entity typePrivate limited company, registered partnership, LLP, or a cooperative society (multi-state or state)Same AgeUp to 10 years from incorporation or registrationUp to 20 years TurnoverNot over ₹200 crore in any financial year since incorporationNot over ₹300 crore ActivityInnovation or improvement of products, processes or services, or a scalable model with high employment or wealth potentialPlus 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](https://dgll.nic.in/sites/default/files/2023-06/GFR%20amendment2.pdf), 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](https://doe.gov.in/files/circulars_document/Works_Manual_SE_2025.pdf) 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](https://coal.gov.in/sites/default/files/2020-01/02-08-16-a.pdf). 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](https://www.startupindia.gov.in/content/dam/startupindia/homebanners/Relaxation_of_Norms_Startups_Medium_Enterprises_PublicProcurement.pdf) that the relaxation covers all startups, not just manufacturing. In a [29 June 2020 letter](https://doe.gov.in/files/circulars_document/Request_clarification_provision_startups_MSMEs.pdf), 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](https://doe.gov.in/manuals) 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 - Register with your DPIIT number. The [Startup India procurement page](https://www.startupindia.gov.in/content/sih/en/public_procurement.html) says startups register on GeM using their DPIIT recognition number, the mobile number used for recognition, PAN and Aadhaar. My [GeM seller registration guide](/blog/gem-seller-registration-guide/) covers the rest of the setup. - 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. - 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. - Claim the EMD exemption separately. It’s a different claim from the turnover relaxation. Upload the certificate as proof against bid security. - 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](/blog/cppp-eprocurement-portal-guide/), 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). See the bid before the window closes Exemption claims and pre-bid queries take time, so you need to see the bid early. TrackTender sends the top 10 GeM tenders matching your state and categories or keywords to Telegram or WhatsApp at 9 AM every day, with bid number, buyer, deadline, days left and EMD on each card. [Start for ₹30 →](/subscribe/) First month ₹30 (about ₹1/day), then ₹300/month. Cancel anytime. ## 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](https://www.startupindia.gov.in/content/sih/en/public_procurement.html) 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 startupMicro or small enterprise ProofDPIIT recognition certificateValid Udyam registration Legal basisGFR Rules 170(i) and 173(i); DoE OMs of 2016 and 2017Public Procurement Policy for MSEs Order, 2012; GFR Rule 170(i) EMD exemptionYesYes Turnover and experience relaxationYes, normally to be givenYes, buyers may relax it Purchase preference (L1+15%, up to 25%)NoYes Tender fee exemptionNot in the manuals’ startup listYes TradersNot addressed; the recognition test is innovation or a scalable modelExcluded Works contractsCovered, for your DPIIT-registered sectorOutside the MSE policy Performance securityNot exemptNot exempt How longUntil 10 years, or ₹200 crore turnoverWhile 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](/blog/emd-exemption-msme-how-to-claim/). For how turnover and experience gates are written in the first place, see [tender eligibility criteria explained](/blog/tender-eligibility-criteria-explained/). ## A pre-bid checklist for startups Run this before you spend a week on any bid. CheckWhere to lookIf it fails Is your DPIIT recognition still valid?Your certificate and incorporation dateBenefits stop; bid as a regular firm Is turnover under the DPIIT limit for every year?Your audited accountsDon’t claim Does the bid give the startup turnover and experience exemption?GeM eligibility block, or the tender’s eligibility sectionMeet the criteria or raise a pre-bid query Does the tender call the work critical, safety or health related?Scope and general termsExpect the bar to stay; raise it before bid opening Can you meet every technical specification?Technical specs, certifications, test reportsNo relaxation covers this Is it a state tender?Buyer name and the tender’s rulesCheck the state’s startup policy Is the certificate attached against each claim?Bid previewFix 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. ## Frequently asked questions Are startups exempted from EMD in government tenders? Yes, in central government tenders, if the startup is recognised by DPIIT. GFR Rule 170(i), as amended on 25 July 2017, exempts recognised startups from bid security. On GeM you upload the recognition certificate while bidding and the buyer validates it. State tenders follow state rules, so check the tender. Can a startup bid for a government tender without experience or turnover? Often, yes. The Department of Expenditure lets buyers relax prior turnover and prior experience for DPIIT-recognised startups, and its manuals say this should normally be done. The buyer can refuse for items tied to public safety, health or critical security operations. Quality and technical specifications still apply in full. Is DPIIT recognition required to get startup benefits in tenders? Yes. The procurement manuals say a startup must be recognised by DPIIT to get the benefits, and the DoE confirmed in 2020 that the turnover and experience relaxation applies only to DPIIT-recognised startups. Calling yourself a startup or being newly incorporated isn't enough. What is the difference between MSE and startup benefits in tenders? Both get EMD exemption and can get turnover and experience relaxed. MSEs also get purchase preference and tender fee exemption, but traders and works contracts are outside the MSE policy. Startups need DPIIT recognition instead of Udyam, have no purchase preference, and their benefits can apply to works. How long does DPIIT startup recognition last? Up to 10 years from incorporation or registration, as long as turnover stays under ₹200 crore in every financial year. Deep tech startups get up to 20 years and a ₹300 crore turnover limit. GeM asks you to confirm your turnover is still within the scheme limits when you claim the EMD exemption. 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/) Keep reading ## More from the blog - [20 October 2026Bid security declaration vs EMD: what it is and when it appliesWhat 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.](/blog/bid-security-declaration-vs-emd/) - [20 October 2026ePBG on GeM: amount, validity, how to submit and releaseWhat ePBG is on GeM, how much the buyer can ask for, the 15-day deadline, how long it must stay valid, and when it's released or forfeited.](/blog/epbg-performance-security-gem/) - [13 June 20265 Tender Tiger alternatives for government tenders in 2026Five honest, fact-checked Tender Tiger alternatives for Indian businesses, what each tender alert service does well, and how to pick the right one.](/blog/tender-tiger-alternatives/) ## Stop reading about tenders. Start winning them. 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