Bid Surety Bonds in India: Meaning, Benefits, and How It Works

What is a Bid Surety Bond? (Meaning) 

A Bid Surety Bond is a financial guarantee submitted while applying for a tender.  It replaces the traditional Earnest Money Deposit (EMD) and ensures the bidder will accept the contract if awarded. 

Instead of blocking cash in EMD, the bidder pays a small premium and gets a surety bond that serves the same purpose. 

Bid Surety Bonds are recognized and accepted under India’s new procurement guidelines, making tender participation easier for contractors, SMEs, and infrastructure companies. 

Why Bid Surety Bonds Matter

1. Frees Up Working Capital 

Traditional EMDs can block lakhs of rupees.  With a bid surety bond, that cash stays in your business. 

2. Lets You Bid for More Tenders 

Because your money isn’t stuck in one EMD, you can expand your tender portfolio. 

3. Low-Cost Alternative to EMD 

Premiums are minimal and far cheaper than depositing full EMD amounts. 

4. No Collateral or Bank Freezing 

Most bonds do not require fixed deposits or guarantees—making them accessible to SMEs and contractors. 

5. Government-Approved System 

Surety bonds are officially recognized under updated procurement rules in India. 

6. Reduces Financial Stress for Contractors 

Better liquidity = better project management. 

How Bid Surety Bonds Work  

Step 1: You apply for a tender 

The tender requires an EMD or a suitable alternative. 

Step 2: You apply for a Bid Surety Bond 

Instead of paying the full EMD, you pay a small premium. 

Step 3: Assurety issues your bid bond 

This bond is submitted along with your tender application. 

Step 4: If you win the tender 

You must accept the contract; otherwise, the surety compensates the authority. 

Step 5: If you don’t win 

The bond simply expires—no money is blocked and no refund process is needed. 

Bid Surety Bond vs Earnest Money Deposit

Feature	Bid Surety Bond	EMD
Cash Blockage	None	High
Cost	Very low	Full EMD amount
Collateral	Not required	Cash or FD required
Tender Capability	High	Limited by cash availability
Ideal For	Contractors, SMEs, infra firms	Traditional bidders

Where Bid Surety Bonds Are Used 

Bid Surety Bonds are useful for any tender that requires EMD, including: 

• Government tenders 

• EPC & construction bids 

• NHAI, Railways, PWD, PSU tenders 

• Infrastructure & urban development projects 

• Supply and service contracts 

• Smart city projects 

• IT, manpower & facility management tenders 

If the tender accepts surety bonds in place of EMD, this is the smart choice. 

Conclusion 

Bid Surety Bonds help contractors and SMEs participate in more tenders without financial strain.  They free up working capital, lower cost, and make bidding much easier. 

With Assurety, getting a Bid Surety Bond becomes simple, fast, and cost-effective. 

What is the cost of a Bid Surety Bond?

A small premium, much lower than the full EMD amount. 

Can any contractor apply? 

Yes. Perfect for SMEs, growing contractors, and infra companies. 

Do all tenders accept surety bonds?

Most government and many private tenders now allow them.