Challenges that hinder growth of CCTV market in India

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The Indian CCTV market is witnessing a slow but healthy growth, attracting bigger companies like Godrej, Canon, Eureka Forbes, Samsung, Panasonic, Sony and many others, into the sector. There is a huge untapped market comprising micro/small businesses that have an urgent need for CCTV security products. Hence, there is a good business opportunity for manufacturers, integrators as well as solution providers. However, these players face quite a lot of challenges, which seem to hamper their business to some extent.

By Sandhya Malhotra

Saturday, February 12, 2011: Threat from Chinese products

Indian market is largely unorganised and is reportedly flooded with inferior security products from Taiwan, China and other Southeast Asian countries. These products score in terms of price when compared to the products sold by Indian players. Says Aditya Khemka, CEO and director, Aditya Infotech Ltd, “The Indian market has been flooded with Chinese products, which are inferior in quality. We find it hard to compete with these low priced products, and we are all aware that the Indian market is very price sensitive.”

Aditya Khemka, CEO & director, Aditya Infotech Ltd

To overcome this challenge, Aditya Infotech has started strengthening its channel partner base. It has also enhanced its pre-and post-sale support to partners and systems integrators, apart from offering strong service support to end customers.

“We are also trying to educate customers about buying genuine products from genuine companies,” he adds. Aditya Infotech is a global distributor, which has been representing more than 20 international CCTV brands in India including ACTi, Avtech, CP Plus, Cynix, D-max, Yoko, Eyeview and Honeywell.

Commenting of what could be done to overcome the threats being faced from Chinese products, Anurag Sehgal, founder and promoter A V Systems, says, “It is important that organisations and individual clients focus on the quality of the product that is being installed in their premises. The consumer should insist on procuring products that come with an inbuilt warranty against any manufacturing defects. In the day and age of the Internet, where all information is available even on cellphones, they should try and make sure that they check the CCTV brand or the manufacturer/supplier of the product, on the Internet. Last but not the least, the focus at the time of purchase should move from low price to quality. Most of the clients would be pleasantly surprised that they can get a much better product with a warranty and a service backup at a price similar to the Chinese products that are being sold in the country without any such facility.”

Sanjeev Sehgal, MD, Samiriddhi Automations Pvt Ltd

AV Systems is an ISO 9001-2000 certified organisation manufacturing CCTV in India. The entire range of CCTVs manufactured by AV Systems are CE certified and marketed in India as well as international markets.

Non-availability of components

Commenting on the challenges faced by manufacturers of CCTV cameras, Sanjeev Sehgal, managing director, Samriddhi Automations Pvt Ltd and owner of Sparsh brand, says, “Manufacturing of security products in India is a big challenge, as none of the components are available locally. We source 70 per cent of the components from other countries. Moreover, the grey market is another deterrent to our growth. Despite the demand, however, there is negligible manufacturing of CCTVs within the country. The industry seems to be oblivious to the enormous potential of this sector and is content to source components from foreign countries like China. Instead of manufacturing, people prefer importing because the product is available at cheap rates outside India.”

Despite teething problems, Samriddhi Automations has witnessed 100 per cent growth last year. It is one of the few Indian manufacturers producing a wide range of CCTV cameras and switches. It is the first Indian company to manufacture indigenously developed, designed and technologically advanced CCTV cameras with technical support from Sony Electronics Singapore Pvt Ltd.

Chiranjeev Singh Bedi, head, sales and service, NCR branch, Godrej & Boyce Mfg

Echoing the same tune, Anurag Sehgal says, “The problem, of course, is the dependence on the foreign suppliers, and the fact that sometimes complete dependence on imports can lead to logistical problems which snowball into the manufacturing schedules going awry. In case the components are available locally at a fair price and quality, the manufacturers would benefit a lot.”

High import duties

The security market, however, does hold immense potential for those players who manage to find the right mix of price, technology and market awareness—the synergies of which will pay rich dividends to a company’s investments in the electronic security industry in India.

“CCTV is no more a luxury item, yet manufacturers and distributors are paying hefty taxes on it. Lack of government support in this area has been encouraging unorganised players to evade taxes and dump inferior security products in India. Moreover, the government should pull down import tariffs to less than 20 per cent, which will enable easy access to security products at an affordable cost. These initiatives will also encourage the local manufacture of security products,” says Khemka.

Lack of standards, industry association and awareness

Anurag Sehgal, MD, AV Systems

Although the security market in India has been growing steadily, there is a lack of a regulatory framework. Many are still unaware of the benefits of installing security products. Also, there isn’t any legislative support from the government for local manufacturing. The government is yet to establish any quality and safety standards for security products.

Says Sanjeev Sehgal, “Unfortunately, we do not have any standards for security products. Lack of standards is also paving the way for more imports and countries like China and Taiwan are dumping products without any set specifications and standards. It is a threat to our security. The day the government sets some standards for these products, these unorganised players will find it hard to sell substandard products.”

Chiranjeev Singh Bedi, head, sales and service, NCR branch, Godrej & Boyce Mfg Co Ltd, emphasises, “To make this industry more streamlined, there is an immediate need for an association, which can raise its voice and fight for the rights of the organised players. There is no regulatory body to keep a check on the industry’s activities, which is a bad situation for a business like ‘security’, which requires sincerity and knowledge. The association can also encourage local manufacturing. Moreover, there is a need to educate customers not to compromise on security by using inferior quality products.”

Adds Sanjeev Sehgal, “The customers’ lack of awareness about the quality of these products is becoming a challenge for us. Indian customers are very price sensitive and to save just a nominal amount, they compromise on the quality of products, even though it involves their own security. Due to their lack of awareness, customers get mislead by any unorganised player. The government should launch a campaign to educate the people and make them aware of the quality of these products.”

“It’s true that the industry is predominately unorganised, but as the market picks up pace, the sector will gradually become more organised and people will surely become more aware of the virtues of installing security cameras,” says Sanjeev Sehgal.

“The key issue is the unorganised sector and the low customer awareness of quality products available in the market. It is important that the mindset move from just having a surveillance system in place to having a working system that takes care of the predictable threat as well as works well over a period of time. Here, the role of the consultant whether it is an architect or interior designer is also critical as they too should focus on quality and durability as against a price point alone,” concludes Anurag Sehgal.

Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine

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