EMD and Performance Security in Government Tenders — What GFR 170 and 171 Actually Say in 2026

Quick answer: Under the General Financial Rules 2017, bid security (EMD) is 2–5% of the estimated value — or a bid-securing declaration in its place — under Rule 170, and Udyam-registered MSEs and DPIIT-recognised startups are exempt. Performance security under Rule 171 was reduced by the Finance Ministry's OM of 29 December 2023 to 3–5% of contract value for goods, consultancy and non-consultancy services; only works carry 3–10% including retention. Most tender guides still quote 5–10%. Layered on top are the MSE procurement policy (25% earmark, L1+15% matching) and the Make in India order (Class-I 50% / Class-II 20% local content). We read the bid document against these rules before you lock money in.

Last verified 4 October 2026 — rules on this page checked against the current notifications. We update it the day a rule changes.

The rules, with their current numbers

Instrument	Rule	Current position
Bid security (EMD)	GFR 170	2–5% of estimated value, or a bid-securing declaration (breach = debarment); MSEs (Udyam) and DPIIT startups exempt under PPP-MSE and DPIIT instructions
Performance security — goods, consultancy, non-consultancy services	GFR 171 as amended by MoF OM 29.12.2023	3–5% of contract value (was 5–10%; 3–10% for a few months in 2023)
Performance security — works	GFR 171	3–10% including security deposit / retention money
Form	—	Bank guarantee (incl. e-BG), FDR, insurance surety bond; released after obligations incl. warranty
MSE preference	PPP-MSE Order 2012 (amended 2018)	25% of annual procurement from MSEs (4% SC/ST, 3% women within it); MSEs within L1 + 15% may match L1 for at least 25% of the quantity; 358 items reserved; free tender documents and EMD exemption — see NSIC SPRS
Make in India preference	PPP-MII Order 2017 (revised 19.07.2024)	Class-I supplier ≥ 50% local content, Class-II ≥ 20%; 20% margin of purchase preference; purchase preference for Class-I only; Class-II excluded where sufficient local capacity exists
GeM buying modes	GFR 149, DoE OM 10.07.2024	Up to ₹50,000 any seller; ₹50,000–₹10 lakh L1 seller; above ₹10 lakh bid/RA — see GeM fees

Why it matters on a ₹2 crore supply contract: performance security at 5% is ₹10 lakh locked for the contract plus warranty; at the old 10% it was ₹20 lakh. A bid document still demanding 10% on goods is out of line with the 2023 OM and can be challenged in the pre-bid query. MSEs should also check that EMD exemption is honoured and not replaced by a "₹0 bid security declaration with higher PBG".

Portals and documents

CPPP (eprocure.gov.in) for central ministries; state GePNIC portals for UP, Haryana and Delhi; eproc2 Bihar; GeM for goods and services
Class 3 DSC, Udyam/NSIC certificates, local-content self-certification (CA certificate above the threshold), turnover and experience certificates, EMD or declaration

What we do

Bid-document review: EMD/PBG percentages vs GFR, MSE/MII preference clauses, deviation and pre-bid queries
Bank guarantee / surety-bond paperwork and release follow-up; disputes and suspensions
Registration stack: GeM, NSIC, DPIIT, Udyam

Figures are quoted from the issuing authority's own notification or portal; anything not yet confirmed on an official page is marked and checked at filing, never estimated.

Which MSME category are you in now? The 1 April 2025 limits (₹2.5/10, ₹25/100, ₹125/500 crore), reclassification and the 45-day rule.

Talk to us before you file anything

Call for a free consultation

Frequently asked questions

What is the performance security percentage under GFR 171?

3–5% of contract value for goods, consultancy and non-consultancy services after the Finance Ministry's OM of 29 December 2023; works remain at 3–10% including retention.

How much EMD is required under GFR 170?

2–5% of the estimated value, or a bid-securing declaration in place of money; Udyam MSEs and DPIIT-recognised startups are exempt.

Is 10% performance security still valid for a goods tender?

It is out of line with the 2023 OM for central procurement; raise it as a pre-bid deviation. State rules may differ.

What does L1 + 15% mean for an MSE?

An MSE whose quote is within 15% of the lowest bid may match the L1 price and take at least 25% of the quantity under the PPP-MSE Order.

What is a Class-I local supplier?

A supplier with at least 50% local content under the Make in India order; Class-II is 20–50%; only Class-I gets purchase preference.

Is a bid-securing declaration safer than EMD?

It costs nothing up front, but a breach (withdrawal, non-signing) leads to debarment for the period stated in the tender.

Which DSC is needed to bid?

A Class 3 digital signature certificate for CPPP, state e-procurement portals and GeM.

Does GeM also follow GFR 171?

Yes — GeM contracts take performance security per GFR 171; buying modes follow GFR 149 (₹50,000 / ₹10 lakh thresholds).