Industry of the Month Security Industry in India

eBizWire
Vol . I Issue. VII, August 2012
Insight

Biz India News Biz Policy Updates The Indian Security Industry

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Business Idea of the Month StartBizIndia Discussion Platform Upcoming Business Summit Contact us

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Biz India News

Public sector miner Coal India Ltd has lined up an investment of Rs 7,500 crore to develop railway tracks and related infrastructure to evacuate coal from Chhattisgarh, Jharkhand and Odisha. These would help the company to evacuate around 100 million Tonnes (mt) of additional coal from each of the States on 16th July 2012. The Central Board of Secondary Education (CBSE) is likely to take the lead in introducing financial education in its post primary level curriculum after th taking a leaf out of Reserve Bank of India's financial literacy goal on 17 July 2012 RBI recognises that basic knowledge about monetary aspects play a key role in financial inclusion and inclusive growth. Imparting financial education among the masses at the early stage of a life cycle can make a real difference in a country where many do not get the opportunity to study beyond school level. On 18 July 2012, Ford India has expanded the diesel engine production capacity at its plant in Maraimalainagar, near Chennai. This, the company hopes, will help address the supply constraint it faced early this year. In the first quarter of the year, Ford Indias Chennai plant was unable to meet the demand for diesel power-trains. Customers had to wait for three months to have their cars delivered. On 19 July, 2012, Mankind Pharma planned for a major turnaround over the next two to three years. The Rs 2,000-crore Company, best known for its consumer brands like Prega News, Manforce, Unwanted-72 and Kaloree-1, is now eyeing the market for diabetes and cardiovascular drugs to record growth in both turnover and profit. On 20 July 2012, Onco Therapies, a wholly owned subsidiary of pharma company Strides Arcolab, has received two US FDA (Food and Drug Administration) approvals for Fluorouracil Injection USP. Fluorouracil is part of the oncology portfolio licensed to Pfizer for the US market and expected to be launched shortly, a press statement said. Fluorouracil is a chemotherapy drug which interferes with cells making DNA and RNA, and stops the growth of cancer cells. It is used to treat several types of cancer including colon, rectum, and head and neck cancers. On 22 July, 2012, Pranab Mukherjee was elected the 13th President of India, capping the long innings of the veteran Congress leader and the party's chief troubleshooter over the past eight years. The former finance minister and the candidate of the ruling UPA, who garnered 69.3% votes, defeated his rival PA Sangma, the candidate backed by AIADMK, BJD and NDA (minus Shiv Sena and JD-U), by a bigger than expected margin. The Diamond business in India is growing at 20 % year on year. Globally the diamond market is seeing a single digit growth of 3-5 percent. Forevermark is growing at 50 percent worldwide well above the global growth. But our base is small since we launched only in 2009, said Mr. Lussier, De Beers rd ED, External and Corporate Affairs on 23 July, 2012.
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Headlines
Coal India to invest Rs 7,500 cr on rail infrastructure in 3 States

CBSE agrees to introduce financial education in school curriculum

Ford expands diesel engine capacity at Chennai plant

Mankind Pharma set to tap core drugs market

Strides Arcolab unit gets USFDA nod for anti-cancer injection

Pranab Mukherjee elected 13th President of India

India to contribute 20% of Dee Beers diamond sales in 5 years

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Biz Policy Updates

New Investment Scheme for QFIs
With a view to promoting further investment in India by Qualified Foreign Investors (QFIs), Reserve Bank of India has come out with a Scheme for Investment for QFIs in Indian corporate debt Securities vide its A. P. (DIR Series) Circular No. 7 dated 16.07.2012. The Indian Corporate Debt securities means listed Non-Convertible Debentures(NCDs), listed bonds of Indian companies, listed units of Mutual Fund debt Schemes and to be listed corporate bonds. QFIs can invest in these securities subject to certain terms and conditions enumerated below: QFIs are required to open a single non-interest bearing Rupee Account for routing the receipt and payment for transactions relating to purchase and sale of securities. The funds in this account shall be utilized for purchase of eligible securities for QFIs or for remittance (net of taxes) outside India. Sale of eligible debt securities can also be done through a registered stock broker on a recognized stock exchange in India. QFIs would be allowed to open a single DEMAT account with a QDP in India for investment in all eligible debt securities Total overall ceiling of investment is USD 1 billion. This limit shall be over and above USD 20 billion for FII investment in corporate debt. Foreign inward remittance shall be through normal banking channel in any permitted currency (freely convertible) directly into the single noninterest bearing Rupee account. QDPs will ensure KYC of the QFIs as per the norms prescribed by SEBI. AD Category-I banks will also ensure KYC of the QFIs for opening and maintenance of the single non- interest bearing Rupee accounts as per the extant norms. The pricing of all eligible transactions and investment in all eligible securities by QFIs under this scheme shall be in accordance with the relevant and applicable guidelines issued from time to time In addition to the reporting to SEBI as may be prescribed by them, QDPs and AD Category-I banks (maintaining QFI accounts) will also ensure reporting to the Reserve Bank of India in a manner and format as prescribed by the Reserve Bank of India from time to time.

Legal Headlines
New Investment Scheme for QFIs

Relaxation:No more requirements for opening and maintenance of a single rupee pool bank account by the QDP and QFIs can henceforth invest in all eligible securities for QFIs through a single non- interest bearing Rupee Account.

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The Indian Security Industry

With 28 states, 7 union territories and a population of 1.22 Billion; India sure is a huge country. With the huge size comes a huge list of needs. You would say Food security, Education, Infrastructure, Transport, Good Sanitary conditions, Social welfare et al. Did you say Security? 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 & shelter is the need for protection & security. That comes even before the need for love, social esteem and self-growth. Believe it or not; ask yourself and youll know its true. Though we hardly notice it, security finds a place in the country as a fullblown security industry which is growing steadily year after year. In fact, its true that there are more security guards than the number of policemen. The private security industry is growing rapidly around the globe and employs twice as many people as governments have police officers REUTERS The security Industry can broadly be categorized into 2 parts; Particulars Classification Services Sector Private manned guarding (i.e. security guards) & Investigation Services Systems Sector Security through devices (i.e. Bank alarms, system integrators, CCTV, Access Controls) Honeywell, GE, Bosch, Tyco, Siemens, HID, etc

Indian Security Market

Investigation Services Manned Security Security Systems Security Assessment Fire Detection

Security Industry

Services

Systems

Major Players

G4S, SIS, Tops, SDB, Cisco, Peregrine, Checkmate, Premier, GI Security among others

Statistics
Globally, US$150 billion industry, which is quite huge Growth rate of 20% over past 10 years and would achieve a rate of 25% annually in future rd 1/3 spend on airport security Number of Security Companies: 15000 Number of Private Guards: 5.5 million approx.
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Services Sector:This sector by and large comprises of the manned guarding services and it dominates the Security industry in India. It has some giant players which operate nationwide through their regional and city offices. They even provide in-house training facilities and job orientation programmes. There are smaller companies as well but owing to the less funds available; the quality of their services cannot be compared.

(Source: Security Report ASSOCHAM in 2011)

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The Indian Security Industry

Around 15000 security companies employing about 55 Lakh security guards, the Indian security services industry is touted to grow at a very high rate as per the report on Security Industry by Assocham. Not only this, the industry happens to be the countrys largest corporate tax payer as per the Central Association of Private Security Industry (CAPSI). The change in the growth rate is a substantial development because just before the barbarian terrorist attacks in Mumbai that shook the whole country; the security sector was witnessing a growth of 20% per year. The government is the major player in ensuring security. A number of innovative projects like Crime and Criminal Tracking Network and Systems (CCTNS), Immigration, Visa and Foreigners Registration & Tracking (IVFRT), National Intelligence Grid (NATGRID, etc. are being implemented where tremendous opportunities exists for the private sector. Systems Sector: Started with very basic devices like bank alarms, this sector has rapidly grown to include devices made with the state-of-art technology like CCTVs, Access Controls, Intrusion Detectors, Door intercoms, etc. It is majorly an import based sector with more and more foreign players coming to India and collaborating with the domestic businesses, appointing distributors and offering sales & after sales support. The security equipment is largely imported from USA, UK, Germany, Singapore, Italy, Hong Kong, Israel, Japan, Korea, China and Taiwan. The framework regulating the Security Agencies:To improve the benchmarks for private security in the country and regulating the industry through a licensing process, Private Security Agencies Regulation Act was enacted in 2005. The act therefore sets forth various standards and requirements which need to be fulfilled if a Private security agency wishes to get licensed. Some of them are: 160 hours of training before deployment. 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) Verification of antecedents of the person wishing to start a business in private security. Maintenance of registers containing details of security officials, managers, supervisors, clients and other such particulars as may be prescribed.

Security Equipments Market

Gadgets used: CCTVs Access Control Systems Metal Detectors Security Doors Door Intercoms

Gadgets imported from different countries like Israel, China, Korea, UK and US Steps to start Business in India: Security

Register Business Entity (Company/LLP) Obtain Basic Tax

Numbers PAN & TAN Register under Labour laws Register under Shops & Establishment Act Get PSRA license

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The Indian Security Industry

How to get registered as a Private Security Agency:The following simple steps need to be followed to get registered as a Private Security Agency: Registering your business venture after checking the availability of the desired name. Registering for Income Tax and other Statutory Authorities i.e. applying for basic tax numbers; i. PAN ii. TAN iii. Service Tax Registering your Domain Name Opening a Current Account with the Bank Obtain License under Private Security Agencies (Regulations) Act, 2005 (PSRA) Registration under various Labour Laws Registration under Shops & Establishments Act, 1948 Arranging for guards and security equipments Challenges faced by the Security Services Sector: Though the industry is flourishing, some bottlenecks which are mentioned below continue to plague the sector. A typical security guard in the country generally lacks proper training; is often under-screened, not properly supervised and not paid satisfactorily. The industry still hasnt bloomed properly. The quality of officers is improving but only gradually; and hence that difference in the quality of services offered is not very prominent in spite of the increasing investments in this sector. Though guards are trained in areas like firefighting, fitness, reading & writing in English, the training needs to be more rigorous. Lack of uniformity in adoption of the Private Security Agencies (Regulations) Act 2005 has caused inconsistency in the security of one state and the other. Only 10 states out of the 28 have adopted the Act so far. Soon, 3 more states are expected to follow the suit. Some business groups are at loggerheads with the State Governments which is a cause for delayed implementation of the law in those states. Some states have their own regulations as far as the security is concerned which makes it unclear as to which law is given precedence over the other. Especially after the Mumbai attacks, the government is facing a lot of pressure to grant license to security guards to carry weapons

Companies in Security Industry in India

Security Service Business in India:

Guarding Service ATM Security Background Screening Manpower Consultancy Event Security

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The Indian Security Industry

Foreign Direct Investment The FDI in the private security sector is limited to 49%. It seems to be the perfect proportion which this industry can expect because of the following advantages: It allows the indigenous security firms like SIS to gain a strong foot-hold in this fast growing sector. Foreign players bring along expertise through their tie-ups; which is genuinely important for the security of our country.

The Foreign Comrades

A big positive for the sector is that players in the foreign market are coming forward to collaborate with the domestic agencies. Such partnerships can do a world of good for the Indian security industry. Interest has been shown by foreign entities in the following way: Joint venture between ARES Group (Israel) and APS Group (India), with the Israel firm providing consultancy and training to the Indian partner. Israel Military Institute offers training courses for Indian Security Executives.

Source: FDI policy

Business IDEA OF THE Month

Events Security Service India is a land of entertainment and Indians are obsessed with noise. Thanks to that, abundant concerts, programmes, shows and other public gatherings are organized throughout the country. But along with that, we also quite frequently hear about such events being cancelled. No prizes for guessing! Security of such huge mass of people is always an issue, sometimes solved and sometimes not. Terror threats, lack of security and subsequent chaos; is all it takes to turn a well planned event into a disaster. So much chaos and you expect a business opportunity here? No kidding! If you are a person who likes to network and has an impressive list of contacts, then this is the avenue for you. If you happen to know people in the entertainment industry, are on good terms with the police officials and are familiar with a slew of event organizers, then there you go! Relevant registrations and license is all you need and you can take it from there. What more? There are enticing prospects to expand to security guards services as well!

American consultancy, AFI International has offered to provide training to third-party private security officials of its clients. It first conducts an audit to figure out the weak areas in the training protocols of the client and then works on addressing the problems.

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StartBizIndia Discussion Platform

NRI wants to open a Garment Manufacturing Unit in Free Zone in India. He wants to manufacture or import the raw materials from outside India and export the finished goods back. Please advice for suitable location. What is the minimum investment required to set up the project? Can he apply for PAN Card in the capacity of NRI? Free Zone covers SEZ (Special Economic Zone) and EOU (Export Oriented Unit). Since, you want to manufacture garments in India and export it to outside India, so, it is recommended to choose setting up of EOU (Export Oriented Unit). The biggest advantage of setting up EOU is that the unit can import capital goods, raw materials, consumables, packing material, spares etc. without payment of customs duty. Similarly, these can be procured indigenously without payment of excise duty. Second hand capital goods can also be imported.

The incentives are as follows:a. Exemption from customs/excise duties. b. Income Tax exemption on income derived from the business of development of the EOU in a block of 10 years in 15 years under Section 80-IAB of the Income Tax Act. c. Exemption from minimum alternate tax under Section 115 JB of the Income Tax Act. d. Exemption from dividend distribution tax under Section 115O of the Income Tax Act. e. Exemption from Central Sales Tax (CST) f. Exemption from Service Tax 100% FDI investment is permitted through Automatic Route. The suitable location is Noida, Uttar Pradesh in North India. Minimum investment in plant and machinery and building is Rs 100 lakhs (INR) for EOU. This should be before commencement of commercial production. In case of SEZ, there is no minimum requirement in terms of investment. The minimum capital requirements of forming a Private Limited Company are Rs. 1 Lakh (INR). In addition to this, the other costs will depend upon number of factors such as size of the business, location, land cost, etc. As far as applying for PAN card is concerned, NRI can apply for PAN in India by submitting certain documents to Income Tax Department

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Upcoming Business Summit

Positioning Bengal Partnering for Growth, Development and Sustainable Security The tremendous growth potential of West Bengal has drawn ASSOCHAMs attention towards it and has given us a sturdy reason to come up with this Seminar. The prime objective of the seminar is to review current policies of the State Government for promoting investment in diversified sectors, besides exploring new investment opportunities in various booming sectors of the State. Date: 22 August, 2012 Venue: Hotel ITC Sonar, Kolkata Social Entrepreneurship: Sustaining Business for Society Indian School of Business is organising Social Entrepreneurship: Sustaining Business for Society programme. In this programme, cases of social ventures at different stages of development will be studied. Date: 27 August 2012 to 29 August 2012 Venue: Indian School of Business, Gachibowli, Hyderabad SME ICT SUMMIT The Summit aims to equip SMEs with the tools, resources and information they need for business readiness and staying ahead of market trends with the use of different ICT solutions.The Summit will bring together the distinguished speakers from information technology sector to exchange latest information on various IT solutions available for SMEs, various IT strategies SMEs can use in order to enhance their growth, challenges faced by SMEs for IT implementation. Date: 7 September 2012 Venue: Hotel Sofitel BKC, Mumbai
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National
Positioning Bengal Partnering for Growth, Development and Sustainable Security

Social Entrepreneurship: Sustaining Business for Society

SME ICT SUMMIT

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Contact Us

Neha Seth E: neha@indiacp.com D: +91.11.40622239

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Disclaimer: This paper is a copyright of Corporate Professionals (India) Private Limited. The entire content of this paper have been developed for the new startups. The author and the Company expressly disclaim all and any liability to any person who has read this paper, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this paper.

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