Security Industry : A Growing Business Prospect

Maslow, a world famous psychologist known for his hierarchy of needs; brought to paper the thought which people generally fail to realize. The second most important need after food and shelter is the need for protection and security. That comes even before the need for love, social esteem and self-growth. Believe it or not; ask yourself and you’ll know it’s true.

Mr. Manoj Kumar
Vice President
+919910688433
manoj@indiacp.com

With 28 states, 7 union territories and a population of 1.22 Billion; India sure is a huge country. With the huge size comes a huge list of needs. You would say Food security, Education, Infrastructure, Transport, Good Sanitary conditions, Social welfare et al. Did you say Security?

Though we hardly notice it, security finds a place in the country as a full-blown security industry which is growing steadily year after year. In fact, it’s true that there are more security guards than the number of policemen.

“The private security industry is growing rapidly around the globe and employs twice as many people as governments have police officers”          

REUTERS

The security Industry can broadly be categorized into 2 parts; Particulars	Services Sector	Systems Sector
Classification	Private manned guarding (i.e. security guards) & Investigation Services	Security through devices (i.e. Bank alarms, system integrators, CCTV, Access Controls)
Major Players	G4S, SIS, Tops, SDB, Cisco, Peregrine, Checkmate, Premier, GI Security among others	Honeywell, GE, Bosch, Tyco, Siemens, HID, etc

Services Sector-

This sector by and large comprises of the manned guarding services and it dominates the Security industry in India. It has some giant players which operate nationwide through their regional and city offices. They even provide in-house training facilities and job orientation programmes. There are smaller companies as well but owing to the less funds available; the quality of their services cannot be compared.

Around 15000 security companies employing about 55 Lakh security guards, the Indian security services industry is touted to grow at a very high rate as per the report on Security Industry by Assocham. Not only this, the industry happens to be the country’s largest corporate tax payer as per the Central Association of Private Security Industry (CAPSI). The change in the growth rate is a substantial development because just before the barbarian terrorist attacks in Mumbai that shook the whole country; the security sector was witnessing a growth of 20% per year.

The government is the major player in ensuring security. A number of innovative projects like Crime and Criminal Tracking Network and Systems (CCTNS), Immigration, Visa and Foreigners Registration & Tracking (IVFRT), National Intelligence Grid (NATGRID, etc. are being implemented where tremendous opportunities exists for the private sector.

Systems Sector-

Started with very basic devices like bank alarms, this sector has rapidly grown to include devices made with the state-of-art technology like CCTVs, Access Controls, Intrusion Detectors, Door intercoms, etc. It is majorly an import based sector with more and more foreign players coming to India and collaborating with the domestic businesses, appointing distributors and offering sales & after sales support.

The security equipment is largely imported from USA, UK, Germany, Singapore, Italy, Hong Kong, Israel, Japan, Korea, China and Taiwan.

The framework regulating the Security Agencies-

To improve the benchmarks for private security in the country and regulating the industry through a licensing process, Private Security Agencies Regulation Act was enacted in 2005. The act therefore sets forth various standards and requirements which need to be fulfilled if a Private security agency wishes to get licensed. Some of them are:

• 160 hours of training before deployment.
• Owners and major shareholders of the agency to be citizens of India. (Foreign firms are however allowed to enter into a relationship with domestic ones)
• Verification of antecedents of the person wishing to start a business in private security.
• Maintenance of registers containing details of security officials, managers, supervisors, clients and other such particulars as may be prescribed.

How to get registered as a Private Security Agency-

The following simple steps need to be followed to get registered as a Private Security Agency:

• Registering your business venture after checking the availability of the desired name.
• Registering for Income Tax and other Statutory Authorities i.e. applying for basic tax numbers;

i. PAN

ii. TAN

iii. Service Tax

• Registering your Domain Name
• Opening a Current Account with the Bank
• Obtain License under Private Security Agencies (Regulations) Act, 2005 (PSRA)
• Registration under various Labour Laws
• Registration under Shops & Establishments Act, 1948
• Arranging for guards and security equipments

Challenges faced by the Security Services Sector-

Though the industry is flourishing, some bottlenecks which are mentioned below continue to plague the sector:

• A typical security guard in the country generally lacks proper training; is often under-screened, not properly supervised and not paid satisfactorily.
• The industry still hasn’t bloomed properly. The quality of officers is improving but only gradually; and hence that difference in the quality of services offered is not very prominent in spite of the increasing investments in this sector.
• Though guards are trained in areas like firefighting, fitness, reading & writing in English, the training needs to be more rigorous.
• Lack of uniformity in adoption of the Private Security Agencies (Regulations) Act 2005 has caused inconsistency in the security of one state and the other. Only 10 states out of the 28 have adopted the Act so far. Soon, 3 more states are expected to follow the suit.
• Some business groups are at loggerheads with the State Governments which is a cause for delayed implementation of the law in those states.
• Some states have their own regulations as far as the security is concerned which makes it unclear as to which law is given precedence over the other. Especially after the Mumbai attacks, the government is facing a lot of pressure to grant license to security guards to carry weapons

Foreign Direct Investment

The FDI in the private security sector is limited to 49%. It seems to be the perfect proportion which this industry can expect because of the following advantages:

• It allows the indigenous security firms like SIS to gain a strong foot-hold in this fast growing sector.
• Foreign players bring along expertise through their tie-ups; which is genuinely important for the security of our country.

Source: FDI policy