Electronic security and surveillance companies in India see demand rising from government and private firms as they strengthen security to ward off terrorist and other attacks, including online threats.
Godrej Security Solutions, a unit of Godrej and Boyce Mfg Co. Ltd, which has maintained a 30% year-on-year growth the last few years, is targeting sales of more than Rs.800 crore this fiscal, against Rs.610 crore in fiscal 2012, said Mehernosh Pithawalla, assistant vice-president (marketing).
The company offers locks, safes and other security products such as bomb and metal detectors and X-Ray baggage scanners.
The home security market alone is worth around Rs.150 crore, said Pithawalla, who is aiming for a significant share of this in fiscal 2013.
Overseas companies such as Honeywell Automation India Ltd, Schneider Electric Infrastructure Ltd and Gunnebo Security Group also see a market potential.
“In the last two years, we have seen an increase in government investment specifically for surveillance-based equipment to secure cities, airports, power plants and other critical assets,” said Anant Maheshwari, managing director, Honeywell Automation and Control Solutions, India. “The major impetus from the government and the private sector for ramping up security is promising and critical to India.”
Sweden-based Gunnebo, a global provider of security solutions and services that has been in India for 80 years, has seen a spurt in growth the past two-three years and business has expanded at a double-digit rate.
The company, which has a presence in more than 30 countries, says India has become its second largest market—from fifth largest last year. It’s aiming to double its revenue from India in the next two years.
“Last year, we invested Rs.30 crore in our manufacturing plant in Halol, Gujarat, to increase production capacity by 75%,” said Sandeep Deshpande, country manager and managing director, Gunnebo India.
The electronic security market is driven by the need for internal security—to protect borders, coastal areas and critical infrastructure such as airports and government buildings.
Over the years, the annual budgetary allocation to the home ministry for the homeland and defence sector has risen. This stands at Rs.53,017 crore for fiscal 2013, more than double the Rs.26,283 crore in fiscal 2008.
The $650 million Indian electronic security and surveillance market—which includes video surveillance, access control, intrusion detection and metal detectors—is expected to witness a 20-22% compounded annual growth rate (CAGR) till 2016, according to research and consulting firm Frost and Sullivan.
According to a September report by consultancy KPMG, the internal security market in India stood at $9 billion in 2011 and is expected to grow at 9% CAGR till 2020, when the sector is pegged to post a revenue of $19 billion. The report added that border security and police modernization, which includes city surveillance, offers further commercial opportunities.
But this growth also raises issues of privacy, especially after transcripts of phone taps allegedly involving politicians, corporate lobbyists and journalists were leaked a couple of years ago.
“While there is no doubt that national security and national interest are paramount, the government needs to strike a balance between protection and preservation of privacy as well as protection of other civil liberties of individuals,” said Pavan Duggal, an advocate in the Supreme Court and a cyberlaw expert.
But he also said the growth of the security and surveillance industry did not have a direct impact on privacy. “We can expect the Planning Commission to come up with draft privacy legislation by the year end,” he added.
With several global security companies coming to India, consultants and system integrators are offering best practices and solutions to end-users, according to Manish Gandhi, director, sales, A&S India, a magazine that caters to security professionals.
The security industry is growing at 30% yearly due to new levels of awareness in both the government and private sector, he said.
Dhiraj Mathur, executive director, leader of the national aerospace and defence practice at PricewaterhouseCoopers, pointed out that the surveillance industry is typically recession-proof, given the rising level of concern over security.
For instance, the consolidated revenue of Zicom Electronic Security Systems Ltd grew 89.56% to Rs.219.42 crore for the year ended 31 March. The stock of Zicom, the first Indian security company to be listed, has risen 198% year-to-date.
The government’s defence offset policy is helping security companies, analysts said. Under this, foreign companies are required to invest a minimum 30% of the contract value into developing related indigenous industries.
“This policy certainly adds a spurt in manufacturing/development of defined security products/technologies in India,” said Neelu Khatri, head, defence and security advisory services at KPMG.
To be sure, the Frost and Sullivan report noted that the market is weakened by “infrastructural inadequacy”, “a lack of standards” and “procedural hurdles”. KPMG said the sector was “fragmented” and without a “single nodal decision making authority”.