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12/04/23 1
Defence, Fire & Security Sector in India
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Land area of over 3.2 million square Km; 7th largest country
Union of 29 states (including the city of Delhi) and 6 Union territories spanning snow capped mountains, tropical rain forests, arid desert, high plateaus, fertile river plains
1.2 billion; 250 million households (70% under 35)
72% rural; 28% urban
Average literacy rate is 65%
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o GDP (2010 est) – USD $1.37 Trillion (China $5.36 Trillion)o India's exports total less than 1% of global trade, compared with 7% for
China
o GDP Growth 7.4% for 2009-10 (estimate 8.5% 2010-11)
o
o Service industry responsible for 62% of GDPo Inflation currently 10.16% but food inflation 17% o Economic indicator – 16 Million new mobile users May 2010
o Interest rates approx 10%
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Industry valued at £50 billion Second largest employer after
agriculture - 31 million people Contributes 20% of GDP Ranks 4th for FDI inflow Growing at 9% per annum
• Phenomenal growth in urbanisation has led to huge unmet demand for housing, retail and commercial spaces
• 150 new Special Economic Zones• 28% of population in urban environments• To rise to 40% by 2012
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Airports - Passenger traffic to grow 10%
Flight cargo by 7%
Plan to modernise 35 non-metro airports and develop seven green field airports
Nagpur cargo and passenger hub
Navi Mumbai airport?
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Largest merchant shipping fleet amongst developing countries - 17th in world
Cargo through 12 major ports has grown annually at 9.5% per year over the last 3 years
• 50 projects valued at US$13 billion planned
• 7 ports to be developed in Maharashtra and Gujarat
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Roads – US $50 billion worth of projects underway
Including 68,000 km of national highway improvements
• 2,000 km of express way development
• $600m on 460 km of Mumbai roads, 20 + new flyovers, strengthening of existing bridges, new Sealink projects and potentially multi million tunnelling needs
Lets give it a shot The statistician Make the quick buck The investor
Strategic thinking Forward Approach Market Perseverance Due Diligence Solid Partner
Essentially 2 sets of drivers:
1. Terrestrial security threat perception- 14000 kms land borders- 7000 kms coastlines- Red corridor- Critical national infrastructure (13 major ports, 200 minor ports, 67000
kms national highways, 150000 MW powerstations)
2. Post 26/11 security climate- Businesses- Hotels- Malls- Airports etc…
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Defence◦ Armed Forces - Military hardware, software, equipment,
consumables and technology.◦ Homeland security – requirements of paramilitary, police,
fire services.◦ Critical National Infrastructure Protection.
Commercial Security◦ Physical Security◦ Cyber security
Research & Development for Security. Education, Consulting & Training for Security.
Recent reports suggest government spending on approx. 5 billion pounds on homeland security.
Defence & homeland security equipment - 15% state of the art
- 35% mature - 50% obsolete.
2009-10 budgetary allocation 20 billion pounds for defence. (35% increase) Acquisitions drafted under the Long Term Integrated Perspective Plan
(LTIPP) expected to include procurements to the tune of 80 billion pounds by 2022.
10th largest defence spender. 70% procurements from overseas. (efforts towards indigenous
production ???)
Physical Security- Pegged at 1.1 to 1.3 billion pounds- Generally understood as electronic security, perimeter security, fire safety,
currency handling etc.- Growth estimated between 25% to 40%- 2014 estimated size 4.5 billion pounds- Opportunities in modernization of existing systems in airports and other
critical infrastructure.- Over 5000 companies (organized and unorganized) ; 150 ISO 9000
certified.- Over 40% of demand met thru imports. (USA, UK, China, Korea, France,
Israel)- Demand for integrated solutions- Emphasis on quality training and accredited solutions- Growing acceptance and demand from SMEs, educational institutions,
residential complexes, hospitals etc.
IIndia Security Market
Segmentation Basis
Segments
Surveillance
Cyber Security
Physical Security
Systems Services
Access Controls
Alarm System
Fire Detection
and Protection
Others
Product Sector Proportion Market Market Size (US$) Size in INR Annual Growth
CCTV (Commercial & Industrial Cameras, Housings, Monitors, DVR) 55% 192.5 866 45%
Access Control (Controllers, Readers, Locking Hardware, Barriers, Cards) 30% 105 473 30%
Intrusion Detection (Perimeter & Building Alarm Controllers & Detectors. Incl. Electric Fences) 2% 7 32 20%
Intercom (Audio & Video Doorphones) 2% 7 32 30%
Others (Metal Detectors, X-Ray etc) 11% 38.5 173 30% TOTAL 350 1575 26%
Had been restricted to central Govt. funded projects. Recently large private players and R&D startups involved Areas of R&D.
Security Planning and Management Policy Loss prevention Systems consulting Certifications and audit Forensics.
Both Union and State governments looking to put forth regulations that will make security more accessible. These include:◦ Reduction in their import customs duty to 5%◦ Reduction in Excise duty to 4%◦ Reduction in state VAT to 2%◦ Abolition of Service Tax levied on guarding
services◦ Classification of security systems as life safety
equipment
Russia, Israel, USA, France, Germany. Increasing JVs Indian companies looking for partners Tatas, Mahindra, L&T, Wipro, etc.
Highly regulated – number of rules for manufacture, import, license, distribution etc.
FDI cap in defence 26% (possibly increase to 49%) Since 2001 Indian private sector allowed to participate with 100% equity
but licensing. Despite FDI caps, many foreign companies setting up JVs. Defence offset policy (30%) Restricted R&D Import duties as high as 30% !! Transfer of Technology clause for some procurement contracts.
Hotel Infrastructure security - US$1.2 billion Transport Sector Security (Aviation + Railway) - US$1
billion The Banking & Financial Sectors security - US$800 million Govt. facilities & real estate - US$400 million; Public Health & Healthcare sector - US$665 million Industry sector - US$840 million; The Indian GPS and Telematics market potential - US$450
million. The vehicle tracking segment of the Indian telematics
market - US$50 million;
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UK – India : The Bilateral Scene
• UK’s Exports to India (2009) – UK £ 2.893 billion (4.1 2008)
• Principal Exports – capital goods, gold, ferrous & non-ferrous metals, electronic goods, chemicals and pharmaceuticals.
• UK’s Imports from India (2008) – UK £4.325 billion
• Principal Imports – Readymade garments, gems & jewellery, agri products, leather goods, chemicals and pharmaceuticals
• UK is India’s sixth largest trade partner
• Educational Co-operation: 44,000 Indian students currently studying in the UK; They constitute the 2nd largest number of international students after China;
• Over 226 UK institutions visited India over the year.
(Source : Centre for Monitoring Indian Economy - CMIE)
