Tender Cost Exemption for MSME: Who Qualifies & How to Claim It?

If you are running a small business and thinking about bidding for government projects, you have probably heard that MSMEs get some benefits. Micro, Small, and Medium Enterprises (MSMEs) play a vital role in India’s economy. So, the government has always supported them by giving various benefits in government tenders. One such benefit is the tender fee exemption for MSME. That basically allows them to participate in tenders without paying certain fees.

If you run an MSME and want to understand how to take advantage of these exemptions, this blog covers everything you need to know. In this blog, we’ll explain what is tender cost exemption for MSME, who qualifies for it, and how to claim it.

What Is Tender Cost Exemption for MSME?

Normally, when a company wants to bid for a government project, they have to pay a few charges. The tender cost exemption for MSME refers to the waiver or reduction in the cost that these businesses would typically need to pay when participating in government or public procurement processes. 

When bidding for government tenders, businesses usually have to pay:

• Tender Document Fee – A non-refundable document fee charged for accessing the tender.
• EMD (Earnest Money Deposit) – A refundable security deposit to ensure the seriousness of the bidder.

Both of these fees can be a burden, especially when we talk about small businesses. That’s why the government has brought some rules to reduce this burden. It now allows MSMEs to skip these payments in certain cases.

Under the Public Procurement Policy for MSMEs (2012), the government gives tender cost exemption for MSME, which means:

• No tender document fee required for eligible MSMEs.
• No EMD (Earnest Money Deposit) required for bidding.

Sounds good, right? But that’s not all. Some tenders even go further to provide tender fee exemption for MSME.

Some more key exemptions given to MSMEs in tenders include:

• Security Deposit Exemption – Some government organizations provide full or partial exemption from security deposits or performance guarantees for MSMEs.
• Price Preference – In some cases, MSMEs may get a price preference of up to 15% over non-MSME bidders.

The Government of India has taken steps under various schemes (like the Public Procurement Policy for MSEs and MSME Development Act) to promote the inclusion of MSMEs in government procurement by reducing their financial barriers and facilitating smoother participation in public sector tenders.

Who Is Eligible for MSME Tender Fee Exemption?

Here, the important thing to know is not every small business qualifies for this exemption. To claim tender fee exemption for MSME, a business must:

• Be registered as an MSME under Udyam Registration (formerly Udyog Aadhaar).
• Have a valid NSIC (National Small Industries Corporation) certificate.
• Participate in tenders where MSME exemptions are specifically mentioned.
• Deal with the goods/services mentioned in the tender.
• Provide valid MSME registration certificates at the time of bidding.

However, certain tenders may still require a security deposit or performance guarantee, so bidders should carefully check the tender conditions.

How to Claim Tender Fee Exemption for MSMEs?

To claim tender fee exemption for MSMEs, follow these steps:

1. Check Tender Documents: Read the eligibility criteria in the tender notice to confirm MSME exemptions apply.
2. Provide Supporting Documents: Upload a valid NSIC Certificate or Udyam Registration Certificate while submitting your bid.
3. Declare MSME Status in the Bid: Clearly mention MSME status in the bid submission to avoid rejection.
4. Follow the E-Procurement Portal’s Process: If bidding online, ensure your MSME registration details are linked to your account on the relevant e-procurement portal.
5. Complete the Bidding Process: Even though you don’t need to pay the tender fee, you must complete the entire bidding process.

Which MSMEs Get the Most Benefits?

• Manufacturers & Service Providers – Registered under NSIC for government procurement.
• Startups Recognized Under Startup India – If also registered as MSMEs.
• Businesses in Priority Sectors – Infrastructure, energy, technology, and defence procurement.

Why MSME Tender Fee Exemption Matters?

The simple reason is money. With tender cost exemption for MSME, small businesses can:

• Save thousands of rupees on tender fees.
• Increase participation in government tenders without financial risk.
• Focus on winning contracts instead of managing bidding costs.

Without these benefits, many small businesses wouldn’t even try because of the high costs.

If you run an MSME, you should definitely take advantage of these exemptions. And if you’re looking for MSME-friendly tenders, there are platforms like Nexizo to help. By using Nexizo, MSMEs can easily find government tenders that offer these benefits and streamline their bidding process.

Final Thoughts

Government tenders can be a great way to grow your business. And the tender cost exemption makes it even easier for MSMEs. It makes them more accessible for by removing financial hurdles. If your business qualifies, don’t just assume you’re automatically exempt. Make sure to check the rules in each tender. And gather documents accordingly.

Looking for the latest government tenders for MSMEs? Nexizo helps businesses discover opportunities, track tenders, and bid efficiently. Get started today!