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What is EMD exemption certificate from MSME?

The MSME sector is a vibrant and dynamic sector of the Indian economy and has been increasingly contributing to its growth. Over the years, several promotional and developmental efforts have been taken by the Government of India to support MSMEs in producing and marketing their products and services in India as well as abroad. 

One such effort is the listing of MSMEs under the Single Point Registration Scheme (SPRS), giving MSMEs a fair platform to participate in government purchases. Under this scheme, MSMEs get tender sets free of cost and are also given exemption from payment of EMD (Earnest Money Deposit). 

Here is everything you should know about the EMD exemption certificate from MSME:

What is the EMD exemption for MSMEs?

Under the Public Procurement Policy for MSEs Order 2012, MSMEs with a valid registration under the SPRS scheme do not have to pay the EMD. EMD is the bid security money obtained from the bidders of a particular tender. This helps MSMEs with limited funds to bid for government tenders without being financially constrained. With more valid applications and bids for tenders, the government aims to improve competition and ensure MSMEs get a fair representation. This, in turn, enables MSMEs to utilize an SME loan to fulfill the tender rather than keep it as a bid security reserve. 

Eligible MSMEs can get the EMD exemption certificate and submit it along with their bid. Further, in 2020, the Indian Finance Minister also announced that the EMD provision would be removed for tenders and will be replaced by a bid security declaration. This benefit will extend up to December 31, 2021, for all types of companies applying, including MSMEs. The decision was made to speed up contracts and ease the financial burden of contractors amidst the COVID-19 impacted Indian economy. 

The road ahead

Apart from offering the EMD exemption limit and other similar financial aids, the government has also opened up different avenues for businesses of all sizes to thrive. Today, business loan eligibility criteria are easy to fulfill, and companies facing a financial crunch due to the COVID-19 pandemic or otherwise can opt for an easily available business loan.

Conclusion

MSMEs and other organizations in need of a business loan can easily check their business loan eligibility and avail the loan without any hassle. Financial institutions offer the flexibility to apply for a loan online and use a business loan EMI calculator to know definite loan payments to plan financial outlays and company budgets. With competitive business loan interest rates companies can look at investing it into themselves and carving out their graph of growth. 

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