Security Industry of India

Mr. Manoj Kumar
Vice President
Security is one of the most important issues in any setting, a home, school, hospital, malls, social gatherings, et al. But it is also one of the most overlooked issues at times. 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.'

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 may sometimes be even safe to say that there are more security guards than the number of policemen today.

The security Industry can broadly be categorized into two categories:
  1. The Security Services Segment: This segment covers the private manned security services i.e. the security guards and dominates the protection industry in India. This segment is said to have existed since the early 1960s and there are various companies in this sector like G4S and SIS among others who operate nationwide through their regional and city offices. This segment happens to be the country's largest Corporate Tax Payer. Not only that, it is touted to grow at 40% every year1.
  2. The Security Systems Segment: This segment covers security provided through devices like Alarms, System Integrators, CCTVs, Intrusion detectors, Door Intercoms and Access Controls. It is majorly an import based sector owing to the technological expertise that foreign players bring. The security equipment is largely imported from countries like USA, UK, Germany, Singapore, Italy, Hong Kong, Israel, Japan, Korea, China and Taiwan. Companies like Siemens, Tyco and Bosch are coming to India and collaborating with the domestic businesses, appointing distributors and offering sales & after sales support.

The legal framework regulating Security Agencies:

To improve the benchmarks for private security in the country and to regulate the industry through a licensing process, Private Security Agencies Regulation Act was enacted in 2005. The Act sets forth various standards and requirements which need to be fulfilled if a Private security agency wishes to get licensed. Some of them are:
  1. Training before deployment.
  2. 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)
  3. Verification of antecedents of the person wishing to start a business in private security.
  4. Maintenance of registers containing details of security officials, managers, supervisors, clients and other such particulars as may be prescribed.

Getting registered as a Private Security Agency

The following simple steps and considerations need to be taken account of, to get registered as a Private Security Agency:

1. Deciding the name of the business

Some things that could be ensured about the name are:
  • The name should sound positive
  • The name should not be difficult to sound or pronounce
  • The name should be unique from other names in the market
  • The name should be descriptive of the business activity

2. Choosing you business structure

Depending on your requirements and comfort, one can choose any of the following forms of business:
  • Public Company

  • Private Company

  • Sole proprietorship

  • Partnership firm

  • Limited liability Partnership Firm (LLP)

3. Reregistration for Income Tax and other Statutory Authorities i.e. applying for
  • PAN (Permanent Account Number)

  • TAN (Tax Deduction and Collection Account Number)

4. Registration of Domain Name

Choosing and registering a domain name is as important as choosing the name for the business. It's practically wrong to imagine not having an online presence in this age of internet.

5. Considering the FDI provisions

The current FDI policy allows Foreign Investment of up to 49% in the private security sector. However, one needs to check other requirements also. For example, FDI is allowed in companies but there are some restrictions as far as the sole proprietorships and partnership firms are concerned. In LLPs also, FDI is allowed through approval route only, that too only in industries where 100% FDI is allowed through automatic route.

6. Opening a Current Account with the Bank.

7. Obtaining license under Private Security Agencies (Regulations) Act, 2005.

8. Registration under various Labour laws.

9. Registration under Shops and Establishments Act, 1948.

Especially after a number of terror attacks hitting the country, the security sector of the country is now a full blown industry. This is more so because people have realized that the value of human lives and their protection is much more than the meager saving as a result of not employing any security personnel or system. Seeing the developments in the Security Agency and considering its perennial nature and an evergreen growth potential, it would not be wrong to say that it offers huge business opportunities for persons who can see the potential in the sector.

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