What is EMD?
Earnest Money Deposit
EMD (Earnest Money Deposit) is a refundable security a bidder pays with a tender bid to show serious intent, forfeited if they break bid terms.
What is EMD?
Earnest Money Deposit, also called bid security, is money or a guarantee that a bidder submits with a tender. It protects the buyer against bidders who withdraw, change their offer, or refuse to sign the contract after winning.
Under GFR 2017, EMD is commonly set at 2–5% of the estimated value of the procurement. Many tenders state a fixed amount instead. Always use the figure given in the tender document.
How EMD works
- Accepted forms often include online payment, demand draft, fixed deposit receipt or bank guarantee, as the tender specifies
- Unsuccessful bidders get their EMD back after the contract is awarded, or earlier if they are disqualified
- The winning bidder’s EMD is usually returned once they submit the performance security, or adjusted against it
- EMD can be forfeited if a bidder withdraws or changes the bid during validity, or fails to sign the contract or submit performance security
Exemptions and alternatives
MSEs registered under the Public Procurement Policy for MSEs are generally exempt from paying EMD, as specified in the tender. Some tenders also exempt other groups, such as recognised startups.
Many buyers, including in many GeM bids, accept a Bid Security Declaration instead of EMD. To claim any exemption, upload the proof the tender asks for.
Common questions
Common questions about EMD in government tenders.
Yes. EMD is refunded to unsuccessful bidders after award, and to the winner once performance security is in place, unless it has been forfeited.
MSEs registered under the Public Procurement Policy for MSEs are generally exempt, as specified in the tender. Upload your Udyam certificate or other proof the tender asks for.
EMD secures the bid before award. A security deposit or performance security secures the contract after award.
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