What is MSE exemption?
MSE exemption and purchase preference let registered micro and small enterprises skip EMD and tender fee, and win orders by matching the L1 price.
What is MSE exemption?
Under the Public Procurement Policy for Micro and Small Enterprises, central ministries, departments and PSUs give certain benefits to registered micro and small enterprises (MSEs). The best known are exemption from paying EMD and tender fee, and purchase preference on price.
The policy applies to goods and services. Works contracts are usually treated differently, so check the tender.
What MSEs usually get
- Free tender documents, or exemption from tender fee
- Exemption from EMD, as specified in the tender, often with a Bid Security Declaration instead
- Purchase preference: an MSE quoting within 15% of the L1 price can be allowed to match L1 and receive part of the order, commonly up to 25%, where the tender allows
- An annual target for buyers to procure a share of their purchases from MSEs, with sub-targets for MSEs owned by SC/ST and women entrepreneurs
Tips for bidders
Keep your Udyam registration current and make sure it covers the goods or services in the tender. Exemptions are often refused when the registered activity does not match.
Upload proof of MSE status exactly as the tender asks. Traders are generally not eligible for these benefits, so check the tender if you resell goods.
Common questions
Common questions about MSE exemption in government tenders.
An enterprise registered as micro or small, for example on the Udyam portal, for the relevant goods or services. Medium enterprises do not get these benefits.
Some tenders relax prior turnover and experience for MSEs and startups, subject to quality and technical requirements. It is not automatic, so check the tender.
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