MSE purchase preference on GeM: benefits for small sellers

The policy behind it

The Public Procurement Policy for Micro and Small Enterprises asks central ministries, departments and PSUs to buy a share of their annual requirement from MSEs, with sub-targets for MSEs owned by SC/ST entrepreneurs and by women. To make that possible, MSEs get specific advantages in tenders. On GeM these advantages show up as lines in the bid document.

Benefit 1: EMD exemption

MSEs registered for the item they are bidding for are generally exempt from paying EMD. Exemption requires valid proof — usually the Udyam certificate — and the item must be covered by the registration. Where the bid requires it, exempted sellers sign a bid-securing declaration instead.

Benefit 2: relaxation of turnover and experience

Many bids exempt MSEs from the minimum turnover and years-of-experience/past-performance criteria, as long as they meet quality and technical specifications. Buyers can withhold this relaxation for specific bids with reasons, so check the exemption line in each bid instead of assuming it is there.

Benefit 3: purchase preference near L1

When the lowest bidder is not an MSE, MSEs whose price is within a band above L1 can be allowed to supply part of the quantity by matching the L1 price. Under the policy as commonly applied, the band is L1 + 15% and the share for MSEs is up to 25% of the quantity, divided among eligible MSEs if there are several — but the exact terms are written in the bid, and some items cannot be split. If you receive an offer to match L1, respond within the time given.

Conditions that decide whether you qualify

• ✓You must be a micro or small enterprise — medium enterprises do not get these benefits
• ✓Your Udyam registration must be valid and cover the goods or services in the bid
• ✓Bids commonly limit purchase preference to MSEs that manufacture the goods or provide the service themselves, not traders reselling another company's goods — read the bid's MSE clause
• ✓Your MSE details must be updated in your GeM profile before the bid end date
• ✓Quality and technical specifications are never relaxed

Make the most of MSE status

Use filters for bids with MSE exemption to find tenders where turnover and experience will not block you. Keep Udyam updated when you add products or activities. And when you price, remember that being within the preference band of L1 can still win part of the order — but only at the L1 price, so make sure that price works for you.

Frequently asked questions

Related guides