Here’s what the Indian security industry is eyeing

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February 16, 2015: Even though the security industry is optimistic about the Narendra Modi government’s ‘Make in India’ initiative, there are certain challenges to be overcome. The industry is keen that the government initiates changes in excise duty, incentives and overall policy. Diksha P Gupta and Kamya Kandhari from the EFY Group interacted with a few major industry players at the seminar ‘Indian Security-The Next Chapter’, to evaluate their views about the future of the security industry…

What are the concerns of the security industry when it comes to co-operation from the government?

What kind of incentives does the security industry get from the government?

Is the security industry really interested in taking up these general incentives?

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What are the essentials required to build up the hardware segment of the security industry?

Do you think that the lack of a conducive policy for the security segment is one reason why manufacturing is not being taken up even by the big players?

Sanjeev Sehgal, chairman, Security Promotion Group of India

The security industry is in the nascent stage and government support is required for its growth. We at SPGI, desire security products to be recognised as an industry and all security equipment and services to be brought under the essential products and services category. The taxes levied in our industry places us in the highest slab for value added tax (VAT) as well as service tax. We demand certain taxes to be eliminated or at least be brought down in line with the lowest slab. Organisations/individuals should be given benefits in the form of income tax deductions or higher depreciation for deploying such equipment on their premises.

There are no special incentives being provided by the government to those who use security equipment or services.

If incentives are provided for manufacturing security equipment in India, it will boost the local manufacturing scenario, which in turn will generate employment, reduce foreign currency outflows and improve affordability. This, in turn, will enhance security and create a safe and secure society for all. We, at SPGI, get continuous demands from the industry for incentives.

First of all, ‘Made in India’ security products being accepted by government departments would help. Developing an ecosystem for manufacturing components like even the most basic plastic or metal parts will also help. Preference in government supplies if quality and specifications are matched, will promote local manufacturing. And Indian standards should be made compulsory to provide a level playing field for local as well as imported suppliers.

This is not a problem faced only by the security products segment; it is a challenge that the entire electronics industry faces. The government has already recognised electronics as a thrust industry and has come up with National Electronics Policy – NEP 2012. The industry is not too aware about these incentives, so with the support of SPGI, we would be able to educate those in our industry about the new policies and incentives.

Vikram Sahgal, general manager, security, India Trade Promotion Organisation

The basic complaint that the industry has is that all this does not translate into real business. The reason for this is very unhealthy competition within the industry. There are no standards set for various equipment so when users want to buy CCTV cameras, for instance, they are not clear on what basis to compare the invoices or quotations for similar products offered by competing firms. If there are standards (with proper ISI marks, or certifications) in place, I think it will become much easier for the users and the industry.

With the new government coming in, a lot of proposals that were in the pipeline, have actually been implemented. A lot of new tenders have been seen in the newspapers; organisations like DMRC, the hospitality industry and others are looking to install new security equipment. Projects worth over Rs 850,000 million are expected from the defence sector. FDI limits have been increased, which means manufacturing will start, and technology transfer will begin.

A lot of interaction has taken place within business communities and it is their ideas that are being translated into reality today. The industry is ready to grab the opportunity that the new government under the leadership of PM Narendra Modi, is offering.

I think the government should instill confidence within the manufacturing fraternity—confidence, in the overall development, that is taking place. When people realise that if they invest money, bring in new technology, or start manufacturing, they will be able to find the buyers, the industry will get the desired boost.

I think the policies are being put in place. The standards are being developed. It is just a matter of time before things fall into place from the government’s side as well as for the manufacturers.

Saran Baweja, senior sales manager, Pelco

Relaxing the customs duty can help improve the quality of imported products entering the country. Also, technology transfer from outside can be helpful for the industry. As far as manufacturing in India is concerned, you have to start from scratch, so instead of re-inventing the wheel, some of the new relevant technologies from abroad can be availed, on easy terms. We can then assemble the products here and market them.

I am not too sure about the incentives that are specific to the security industry, but I know there are some common benefits that are offered to all the industries.

Yes, but only to a certain extent. People do want to manufacture here. The cost of the capital required for manufacturing is very high in India and as I said, when we know of a mature technology being readily available, there is very little incentive to develop and manufacture products here.

When we talk about manufacturing in India, it should be of something which is new and niche. Security products are closely linked to technology and R&D. I think everything has already been invented. So one should do something really new and innovative, and avoid making things that are already available. I think we should be investing in R&D centres to achieve this. We can be the R&D centre of the world.

I am not the best person to answer this as we are not into manufacturing in India. But I think that the security industry is not very mature. It needs a lot of reforms and policies to be put in place, before it can evolve and for people to start thinking in terms of manufacturing.

Nitin Sharma, general manager, Dorset Kaba

Taxation is one of the biggest concerns in the security industry right now. The duties on security products are high. If you look at the duty structure, it is around 28 per cent. The duties in our country are so high that it’s virtually impossible for a good product to come to India. As far as manufacturing in India is concerned, excise is a big issue.

I don’t think we have any incentives right now. We are facing competition from everywhere but yet there are no incentives at all.

We import the electronic parts and assemble our products here. We pay 28 per cent duty for importing parts and then excise for assembling. The problem is that our product costs more than what it costs in Germany, where manpower costs are among the highest in the world. So, it is quite an issue for players like us.

The first thing to be tackled should be the customs or the duty part. We need to reduce that. Second, the government needs to provide incentives, may be in terms of land, better policies, income tax, et al, specifically for the security products industry.

Yes. Actually there is no policy for the security products industry. We are manufacturing or assembling here as per our needs but there is certainly a lack of a policy to take the industry forward in the desired direction. We are hoping that the latest ‘Make in India’ campaign by the Indian government will help the industry and bridge these gaps.

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