01
What is EMD or bid security?
Earnest Money Deposit is submitted with a bid in the amount, form and validity prescribed by the tender. It protects the authority if the bidder withdraws during validity, refuses award or otherwise triggers a stated forfeiture condition. Bid security and EMD are often used similarly, while a bid-security declaration is a different undertaking used when expressly permitted.
Practical checks
- Use the precise amount and beneficiary.
- Check claim period beyond bid validity.
- Place proof in the required cover and, if required, deliver the original.
Questions answered in this section
- What is EMD?
- How is EMD calculated?
- What is bid security?
- What is a bid security declaration?
- Is EMD always a percentage?
- What forms of EMD are accepted?
- Can EMD be a bank guarantee?
- What validity must EMD have?
02
How to claim an EMD exemption
An exemption must be permitted by the tender and supported by the specified valid registration or certificate. Select the exemption option in the portal and upload proof in the required location. An exemption from EMD does not automatically waive tender fees, experience, specifications or other eligibility conditions.
Practical checks
- Check the covered product or service activity.
- Verify certificate validity and bidder-name consistency.
- Do not leave the EMD field unanswered merely because relief is expected.
Questions answered in this section
- Who can claim EMD exemption?
- How does MSME EMD exemption work?
- How does startup EMD exemption work?
- What proof must be uploaded?
- Can exemption be rejected?
- Does exemption waive tender fee?
- Can a reseller claim exemption?
- Does NSIC give EMD exemption?
03
Refund and forfeiture
Unsuccessful bidders normally receive EMD release according to the tender and procurement process; the successful bidder’s release may depend on furnishing performance security. Withdrawal during bid validity, refusal to accept award, false declarations or failure to provide required security may lead to forfeiture when the tender provides it.
Practical checks
- Keep payment and release references.
- Follow up through the official procurement channel.
- Read forfeiture events before signing the bid.
Questions answered in this section
- When is EMD refunded?
- Why is EMD refund delayed?
- When can EMD be forfeited?
- What happens if I withdraw?
- What happens if L1 refuses award?
- Can wrong EMD cause rejection?
- Can short EMD be corrected?
- Is EMD returned after cancellation?
04
Performance security, security deposit and retention
The successful bidder may need to provide a performance bank guarantee within a short period after the letter of acceptance. Security deposit and retention may be deducted or held during execution. Amount, validity, claim period, reduction and release depend on the contract.
Practical checks
- Use the prescribed bank-guarantee wording.
- Track expiry and claim dates independently.
- Plan the working-capital impact before bidding.
Questions answered in this section
- What is performance security?
- What is PBG?
- What is security deposit?
- What is retention money?
- When is PBG submitted?
- When is security released?
- Can PBG be reduced?
- What happens if PBG is late?
Official sources and further reading
- Department of Expenditure — Manual for Procurement of Works, 2025
- Startup India — Public Procurement
- Ministry of Micro, Small & Medium Enterprises
Reviewed against the cited sources on 27 September 2026. Requirements can change and the specific tender document remains controlling.