Why MSMEs and Startups Fail in Competitive Tenders (And How to Win More Bids)
In India’s expanding procurement ecosystem, Micro, Small, and Medium Enterprises (MSMEs) and startups have unprecedented access to government and private sector contracts. Thanks to initiatives like GeM (Government eMarketplace), Startup India, and the Public Procurement Policy, digital tendering has become more inclusive. Yet, despite policy advantages, many MSMEs and startups struggle to secure tenders or get disqualified at early stages.
This guide is tailored for MSMEs, suppliers, service providers, contractors, and small-scale industries in India, aiming to identify why most fail and, more importantly, how to win more tenders consistently.
🔍 Common Reasons Why MSMEs and Startups Fail in Tenders
- Incomplete or Non-Compliant DocumentationMost tenders are disqualified at the document scrutiny stage. Frequent errors include:
- Missing GST, PAN, or Udyam certificates
- Outdated Digital Signature Certificate (DSC)
- Absence of work experience certificates
- Incorrect financial statements or turnover proofs
Pro Tip: Maintain a ready digital folder with updated versions of all critical documents and certifications.
- Lack of Pre-Qualification ExperienceMany tenders—especially from PSUs and large departments—require:
- Minimum turnover (e.g., ₹50 lakh or ₹1 crore)
- Experience in similar projects
- Work completion certificates
MSMEs and startups often lack the project history to meet such conditions.
- Inability to Compete on Price (L1 Criteria)Tenders often go to the Lowest Bidder (L1), especially in commodities and civil works. MSMEs with higher input costs or limited supply chain capacity can’t always underbid larger players.
- Poorly Written Technical BidsWhile price matters, technical evaluation is equally important. Incomplete or unclear technical documentation leads evaluators to reject the bid even if the pricing is competitive.
- Late Submission or Portal ErrorsE-tendering portals like GeM, CPPP, or State eProcurement sites require precise navigation. Last-minute uploads often fail due to:
- Server congestion
- Missing Java or browser plugins
- Expired DSC tokens
- Misunderstanding Tender ScopeMany first-time bidders misread the tender scope, assuming it fits their capabilities. This leads to non-compliance, under-quoting, or submitting a technically irrelevant proposal.
✅ How to Win More Tenders: Actionable Strategies for MSMEs & Startups
- Register and Certify Your Enterprise ProperlyEnsure your business is registered under:
- Udyam Registration (MSME Certificate)
- Startup India DPIIT Certificate
- NSIC Registration (for EMD exemption)
- GeM Portal and CPPP
These offer benefits like:
- EMD Waivers
- Price Preference
- Relaxation in Turnover & Experience
- Build a Tender-Ready Compliance KitPrepare and update the following:
- PAN, GST, Udyam, and Startup Certificate
- IT Returns (last 3 years)
- Work Experience & Completion Certificates
- Balance Sheets with CA Certification
- Authorization or OEM Letters (if applicable)
- ISO, NSIC, or quality certifications
- Use Tender Discovery Tools EfficientlyDon’t rely on manual searches. Use:
- Tender Aggregator Portals like TenderJunction, BidAssist, TenderTiger
- GeM & CPPP daily alerts
- Filters like category, state, department, EMD value, etc.
Set alerts for: Construction tenders, Civil works, IT procurement, Health sector, Startups, etc.
- Focus on Low-Competition, High-Relevance TendersInstead of targeting high-value or saturated tenders:
- Target niche or department-specific tenders
- Bid for zone-wise or smaller lot tenders
- Start with offline tenders where digital competition is lower
- Draft Strong Technical ProposalsA winning tender needs:
- Clear Scope Understanding
- Demonstrated Capabilities
- Relevant Case Studies or Work Experience
- Delivery Timeline and Execution Plan
Don’t copy-paste templates—customize based on scope.
- Form Consortiums or Subcontracting AlliancesIf you lack experience or scale, partner with experienced bidders:
- As consortium partners for joint bids
- As authorized resellers or OEM support agents
- As execution subcontractors
This helps you gain experience and credibility.
- Attend Pre-Bid Meetings and Clarify DoubtsMany startups skip pre-bid meetings. These forums provide:
- Clarity on eligibility
- Changes in BOQ or requirements
- Insights into competitors’ queries
- Understand Reverse Auctions (RA) and L1 StrategyEspecially on GeM:
- RAs allow live bidding
- Watch your margin vs competition
- Don’t go too low—ensure profitability
🛠️ Tools & Resources Every MSME Bidder Should Use
| Tool | Purpose |
|---|---|
| GeM Portal | Bidding for central procurement |
| CPPP | Central PSU tenders |
| State Portals | Local govt & municipal tenders |
| TenderJunction LLP | Alerts, documentation, consultancy |
| NSIC | EMD waiver & single point registration |
| DPIIT | Startup recognition |
| Class 3 DSC | Secure document signing |
📌 FAQs With Answers
Q1. How do I get EMD exemption for MSME tenders?
Register your business on Udyam and optionally with NSIC. Upload certificates during bid submission. Many tenders explicitly allow EMD exemption for MSMEs.
Q2. What is the minimum turnover required for government tenders?
It varies. Some tenders require ₹10–50 lakhs, others ₹1 crore+. MSMEs may get relaxation under public procurement policy.
Q3. Can a startup with no prior work win a government tender?
Yes, if the startup is registered under Startup India and the tender allows turnover/experience relaxation. Look for tenders labeled as Startup Friendly.
Q4. How do I avoid disqualification in tenders?
Submit all documents in required formats
Follow the checklist exactly
Don’t submit password-protected files
Use updated DSC
Avoid last-minute uploads
🚀 Tender Success Is Possible: Let Experts Help
Winning tenders is not just about quoting low—it’s about understanding procurement behavior, meeting eligibility, and crafting strong proposals.
If you’re an MSME or startup looking to grow through tenders, consider expert assistance from professionals who:
- Monitor tenders daily
- Help with GeM & CPPP registration
- Review your proposals and documents
- Train you in reverse auctions and eProcurement tools
📞 Need Help? Contact TenderJunction LLP
Contact:
📞 +91-9898570353
📧 info@tenderjunction.in
🌐 www.tenderjunction.in
🧾 Conclusion
MSMEs and startups in India are well-positioned to succeed in tenders, provided they avoid common mistakes and adopt professional tendering practices. With the right compliance, strategy, and support, you can go from rejected bidder to repeat winner.
Now is the time to leverage Udyam benefits, GeM growth, and public procurement policies to win more business.
