Finance ministry extends benefit of reduced performance security for govt contracts till March 2023

The finance ministry on Thursday extended till March 2023 the benefit of reduced performance security in government contracts.

According to the rules, a successful bidder awarded a government contract has to deposit a performance security of 5-10 per cent of the value of the contract with the government.

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To help commercial entities and contractors tide over the liquidity crunch post the first wave of the COVID pandemic, the finance ministry had in November 2020 reduced this performance security to 3 per cent for all tenders/contracts issued or concluded till December 31, 2021.

The finance ministry on Thursday said that the Government of India has decided to extend the benefit of reduced performance security of 3 per cent up to March 31, 2023, for all central government tenders/contracts issued/concluded till March 31, 2023.

"With this relief, the industry could deploy additional resources in project execution as timely and economical project execution by industry is vital for high speed development of infrastructure as envisaged through the National Infrastructure Pipeline," the ministry said.

The relief has benefitted industries especially in construction, manufacturing and service sectors and will enable them to respond with vigour to the demands of the government for efficient execution of the projects, it added