Guide 04 Procurement and tendering
How GeM works for defence suppliers
GeM, the Government e-Marketplace, is the online marketplace through which central government buyers, including the Ministry of Defence, purchase goods and services. Rule 149 of the General Financial Rules makes it mandatory for procuring entities to buy through GeM where an item is listed there, and several defence PSUs now expect their vendors to hold a GeM seller ID as well.
- Topic
- Procurement and tendering
- Checked
- 23 September 2026
- Sources
- 3
- Questions
- 5
01
What GeM is, and why it is mandatory
GeM is the government's online marketplace for buying goods and services, run to replace ad hoc purchasing with a transparent, price-comparable channel. Rule 149 of the General Financial Rules requires procuring entities, government departments, ministries and central public sector enterprises among them, to buy goods and services available on GeM rather than sourcing them elsewhere. The Ministry of Defence has ranked among GeM's largest buyers by order value.
For a supplier, this means a product or service category listed on GeM effectively has to be reached through GeM, not through a separate paper tender, whenever the buyer is a covered government entity.
02
Do I need GeM registration to supply a DPSU?
Often yes, even where the DPSU also runs its own vendor registration. Bharat Dynamics Limited, for example, asks all its vendors to register as GeM sellers and to quote their GeM seller ID for its procurements, alongside its own separate vendor registration route. Registering on GeM early avoids losing out on tenders a buyer issues only there.
03
GeM purchase methods, by value
The General Financial Rules set these thresholds, and they have been revised over time, so check the current GFR or GeM's own published limits rather than an old figure before deciding how to price a listing. The mechanism that applies changes how a seller should quote: a direct-purchase listing competes on price and delivery shown on the catalogue page, while a reverse auction only starts once bidders have already qualified technically.
- Direct purchase from any available seller, for small values
- Lowest-price comparison among offerings from at least three manufacturers, for mid values
- Mandatory bidding or reverse auction above the upper threshold
04
Registering as a seller: caution money and other checks
GeM announced in 2025 that new sellers no longer need to deposit caution money to register, and that existing sellers can withdraw deposits already made through the seller dashboard's caution money management option, a change from the earlier policy that required one. Before registering, read GeM's current seller terms for any other checks that apply to a specific product category, such as OEM authorisation, since these vary by what is being sold rather than by GeM registration alone.
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Questions people also ask
How GeM works for defence suppliers
What is GeM and is it mandatory for defence buyers?
GeM, the Government e-Marketplace, is the online marketplace for government purchases of goods and services. Rule 149 of the General Financial Rules makes it mandatory for procuring entities to buy goods and services available on GeM. The Ministry of Defence has been among the largest buyers on GeM by order value.
Is GeM seller registration free? Do I still pay caution money?
GeM announced in 2025 that new sellers no longer need to deposit caution money, and that existing sellers can withdraw their deposits through the seller dashboard. Before registering, read GeM's seller terms for any other charges or checks, such as OEM vendor assessment, that apply to a specific product category.
Do I need GeM registration to supply to a DPSU?
Often yes. Central government buyers must use GeM for goods and services available on it, and some DPSUs make it explicit: BDL asks all vendors to register as GeM sellers and provide their seller ID for its procurements, on top of its own separate vendor registration route.
When does GeM require bidding or a reverse auction?
The General Financial Rules set GeM purchase methods by value: direct purchase from any available seller for small values, lowest-price comparison among at least three manufacturers' offerings for mid values, and mandatory bidding or reverse auction above the upper threshold. These limits have been revised over time, so check the current GFR before relying on a specific figure.
What is Rule 149 of the General Financial Rules?
Rule 149 requires government procuring entities, ministries, departments and central public sector enterprises among them, to buy goods and services through GeM where those goods or services are available there. It is the rule that makes GeM effectively mandatory rather than optional for a large share of government purchasing, defence included.
Checked against
Sources
- 01General Financial Rules 2017, CPPP guidelines summary, Department of Public Enterprises
- 02Registration on GeM, Bharat Dynamics Limited
- 03Caution money policy (superseded 2025), Government e-Marketplace
This guide explains how the system works in general, as the documents above describe it, and was last checked on 23 September 2026. Rules and thresholds change: the governing document is the authority, not this page.
On this site
Where this meets the work
- Vendor registration information for new suppliers
- Defence contract works
- The maintenance contract record
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