Startup relaxation: prior experience and turnover rules

GFR 2017 Rule 173(i) says the condition of prior turnover and prior experience may be relaxed for startups, subject to meeting quality and technical specifications and making suitable provisions in the bidding document. The wording is unchanged in the compilation of the GFR updated to 31 January 2026. The Manuals for Procurement of Goods (2024), Works (2025) and Non-consultancy Services (2025) apply it to DPIIT-recognised startups, whether or not they are also micro, small or medium enterprises, and to works as well as goods and services.

It relaxes the hurdle of having done the work before, and nothing else. The startup must still meet the specification and quality requirements, and the bidding document must carry a provision for the relaxation. Rule 170(i) separately lists DPIIT-recognised startups among those who need not furnish bid security.

Department of Expenditure office memorandum F.20/2/2014-PPD(Pt.) of 20 September 2016 settled whether the relaxation is optional. Normally the buyer has to ensure the criteria are relaxed for startups, except for procurements such as items tied to public safety, health or critical security operations and equipment, where adequate justification exists for the buyer to keep the criteria. A further memorandum of 27 July 2017 confirmed it covers all startups, not only manufacturers. The three manuals repeat this as not optional, and in their startup support paragraphs say the procuring entity's decision is final. The Works and Non-consultancy Services manuals also limit the benefit to the industry or sector for which the startup is registered with DPIIT, and ask for the bidder's certificate showing it.

MSEs are treated more loosely. The Ministry of MSME's FAQ of 25 March 2022 says central buyers may relax these criteria for MSEs under para 16 of the 2012 Order, so for an MSE it is a discretion and for a recognised startup it is the default. On GeM the bid document carries a startup exemption line for turnover and years of experience, and the standard clause requires a bidder claiming it to upload supporting documents for the buyer to check.

The test is DPIIT recognition, not the age of the company. The Startup India recognition page gives the current criteria: a private limited company, partnership firm, LLP or cooperative society, up to ten years from incorporation (twenty for deep tech), with turnover below Rs 200 crore in any year (Rs 300 crore for deep tech). The turnover limit was raised from Rs 100 crore in the revision the Government announced on 5 February 2026, so the Rs 100 crore printed in the Goods Manual 2024 is superseded. The manuals also say an entity formed by splitting up or reconstructing an existing business is not a startup.

The usual mistake is to treat the waiver as automatic. The bidder has to hold the DPIIT certificate and upload it, the tender has to carry the provision, and quality and technical specifications still apply. The standard GeM clause names Bidder Turnover and Experience Criteria (and OEM Average Turnover for an OEM). It does not name the separate past performance clause, so read the bid before assuming that is waived too.