GeM Caution Money, Incident Management and Seller Penalties

On GeM, how you perform is recorded, and the record affects what you can bid for next. That makes delivery commitments a strategic decision rather than a sales one, and it is the part of selling on the platform that new sellers underestimate.

Caution money

GeM requires sellers to deposit caution money in order to participate in bids, with the amount linked to seller category. It sits as a deposit against seller conduct on the platform.

Two practical points. It is a real call on working capital, so it belongs in the same calculation as EMD and guarantee margin. And it is deposited once for platform participation rather than per bid, which makes it cheaper per bid the more you bid.

Where a seller's conduct leads to a deduction, the deposit has to be topped up to continue participating.

Incidents

Buyers can raise incidents against a seller where something goes wrong: non-supply, delayed supply, supply not matching specification, or a failure to respond.

An incident is a record. What follows from it depends on what happened and on the seller's response, and can include deduction from caution money, restrictions on participation, or in serious cases removal from the platform.

The important structural point: an incident attaches to your seller account, not to the order. It is visible in your record after the order is long finished.

Why delivery commitments are the real risk

The commercial pressure in a bid is to commit to the delivery period the buyer wants, because a shorter delivery is competitive. The consequence of missing it is not confined to that order.

A seller who wins three orders by promising delivery they cannot meet, and misses on all three, has traded three orders' margin for a record that constrains future participation. That is almost never a good trade.

Keeping the record clean

Practical habits that prevent most incidents:

• Confirm stock or supplier lead time before bidding, not after winning
• Read the delivery location, because a bid won for a location you cannot serve economically is a bid you will want to under-serve
• Respond to buyer communication quickly, since non-response is itself a category of incident
• Where a delay is unavoidable, communicate it early and in writing. A documented, early-flagged delay is treated very differently from a silent one
• Check the [ATC](/blog/gem-bid-participation-guide) for inspection and testing conditions before committing, because a rejection at inspection is a supply failure on your record

When an incident is raised against you

Respond, in the platform's process, in the time allowed, with facts. The response is part of the record.

Where the incident arises from something outside your control and you have documentation, submit it. Where it arises from something within your control, an acknowledgement with a corrective step is generally a better position than a dispute you will lose.

Not responding is the worst option available, and it is the most common one.

The wider pattern

Performance consequences are not unique to GeM. In works contracting the same forces operate through performance guarantees, retention money and, at the far end, blacklisting and debarment. GeM simply makes the record more visible and more automatic.

The underlying discipline is the same in both: do not win work you cannot deliver. The bid or no-bid framework treats capacity as one of its five tests for exactly this reason.

Where this sits in the platform

If you are new to GeM, the order is registration, catalogue, then bids: GeM seller registration, then how to participate in a GeM bid. This page is about what happens after you start winning, which is the part worth reading before you do.

Avsar tracks live GeM bids alongside every other portal so the delivery commitments you make are made against a full view of what you already owe. See GeM tenders.