In a bid to ease the doing of business, the government has revised the Bid Security Rule of General Financial Rules (GFR), 2017, wherein Department of Industrial Policy and Promotion (DIPP) recognised start-ups now no longer have to submit the Earnest Money Deposit (EMD).
The information was provided by a series of tweets from the official Twitter account of Startup India, stating that participation in government tenders becomes easy now for start-ups.
Earnest money is the money paid to confirm a contract. It is a deposit made to a seller showing the buyer’s good faith in a transaction.
If we look back at the rule prior to the latest revision, interested bidders were required to submit an earnest money/bid security with a view to establishing reliable sources for procurement of goods commonly.
— Startup India (@startupindia) July 26, 2017
In this regard, the Central Purchase Organisations were to prepare and maintain item-wise lists of eligible and capable suppliers. Such approved suppliers will be known as “Registered Suppliers”. All Ministries or Departments may utilise these lists as and when necessary. Such registered suppliers were prima facie eligible for consideration for procurement of goods through Limited Tender Enquiry.
The EMD exemtion is not the only fish in the pond of DIPP-recognised start-ups’ benefits. Other perks of being a start-up include self-certification, patent benefits, Rs 10,000 crore ‘Fund of Funds for Start-ups’, tax exemptions for three years, et al. The government is also likely to come up with a Rs 2000 crore fund for start-ups by the end of July, 2017.