In today’s world, the Government has made numerous efforts to promote entrepreneurship and boost small-scale businesses. One such effort is the exemption of bid security for various categories of sellers as mentioned in clause 4, section XIII, sub-section ‘m’ of GeM GTC. Curious if your business falls under this exemption? Then you have come to the right place. This article will discuss all the bid security exempted categories and the reasons behind the exemption.

What is Bid Security?

Bid security is a form of security provided by a bidder in order to guarantee the performance of their obligations under the bid. It is a form of security deposit required from bidders in the form of a bank guarantee and is generally issued for a pre-defined amount of money. In India, the security amount is usually between 2%-5% of the value of the bid and is required from the bidder at the time of submitting the bid. The security deposit is refundable if the bidder is successful in the bidding process.

What are all the Bid Security Exempted Categories?

Let us take a look into the bid security exempted categories under the clauses.

1. Micro and Small Enterprises

Micro and small enterprises (MSEs) are exempted from furnishing bid security if they are the manufacturer of the primary product category or service provider of the primary service category. The primary product category refers to the products that the seller specializes in manufacturing, while the primary service category refers to the services that the seller specializes in providing. The credentials of the MSEs are validated online through Udyam registration or Udyog Aadhaar and uploaded supporting documents.

The reason behind this exemption is to promote the growth of small businesses in India, which are a significant contributor to the country’s economy. By exempting bid security for MSEs, the government aims to provide them with an equal opportunity to participate in the bidding process.

2. Start-ups

Start-ups recognized by the Department of Industrial Policy and Promotion (DIPP) are also exempted from furnishing bid security. The reason why start-ups are a part of bid security exempted categories is to promote entrepreneurship and innovation in the country. Start-ups are a significant contributor to the economy and create job opportunities for the youth. By exempting bid security for start-ups, the Government aims to encourage more start-ups to participate in the bidding process and provide them with an equal opportunity to compete with established players.

3. KVIC, ACASH, WDO, Coir Board, TRIFED, and Kendriya Bhandar

Khadi and Village Industries Commission (KVIC), All India Handicrafts Board (ACASH), World Development Organization (WDO), Coir Board, Tribal Cooperative Marketing Development Federation of India (TRIFED), and Kendriya Bhandar are exempted from furnishing bid security. The reason behind this exemption is to promote rural entrepreneurship and preserve the traditional handicrafts and cottage industries. These organizations are significant contributors to the country’s rural economy and provide employment opportunities to the rural population. By exempting bid security for these organizations, the Government aims to promote and support their growth and development.

4. Verified Vendor Assessment

Sellers who have got their credentials verified through the process of Vendor Assessment by Vendor Assessment Agencies for the primary product or primary service for which Bid or RA has been invited are exempted from furnishing bid security. The reason behind this exemption is to ensure the quality of products and services provided by the sellers. By exempting bid security for sellers who have undergone vendor assessment, the Government aims to promote the use of high-quality products and services in the bidding process.

5. Sellers/Service Providers with Annual Turnover of INR 500 Crore or More

Sellers or service providers with an annual turnover of INR 500 crore or more, at least in one of the past three completed financial years, are exempted from furnishing bid security. The reason why they are a part of the bid security exempted categories is to promote the use of established and reputed players in the bidding process. By exempting bid security for sellers or service providers with a high turnover, the Government aims to promote healthy competition in the bidding process and ensure the use of high-quality products and services.

6. Micro and Small Enterprises Registered with NSIC

Micro and small enterprises registered with the National Small Industries Corporation (NSIC) for the primary product category are exempted from furnishing bid security. The credentials of the MSEs are validated through the NSIC database and uploaded supporting documents. The reason behind this exemption is to promote the growth of small businesses and encourage their participation in the bidding process.

In conclusion, bid security is a crucial requirement in the bidding process as it ensures that the seller is serious about fulfilling the terms of the contract. However, the Government has exempted various categories of sellers from furnishing bid security to promote entrepreneurship, boost small businesses, and ensure the use of high-quality products and services in the bidding process.

Conclusion

To summarise, these bid security exempted categories include micro and small enterprises, start-ups, KVIC, ACASH, WDO, Coir Board, TRIFED, and Kendriya Bhandar, vendors who have undergone assessment, sellers or service providers with a high turnover, and micro and small enterprises registered with NSIC. It is essential to note that even though these categories of sellers are exempted from bid security, they are still required to meet the other terms and conditions of the bidding process. Additionally, the exemption does not mean that the quality of their products or services will be compromised.

Overall, the exemption of bid security for certain categories of sellers is a significant step towards promoting entrepreneurship and ensuring healthy competition in the bidding process while maintaining the quality of products and services provided.

 

 

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