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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 GDP
o 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

9.  Lets give it a shot
 The statistician
 Make the quick buck
 The investor

10.  Strategic thinking
 Forward Approach
 Market Perseverance
 Due Diligence
 Solid Partner

11. 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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14.  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.

15.  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 ???)

17.  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.

18.  I
India Security Market
Segmentation
Basis
Segments
Surveillance
Cyber
Security
Physical
Security
Systems Services
Access
Controls
Alarm
System
Fire
Detection
and
Protection
Others

19.  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%

20.  Had been restricted to central Govt. funded projects.
 Recently large private players and R&D startups involved
 Areas of R&D.

21.  Security Planning and Management
 Policy
 Loss prevention
 Systems consulting
 Certifications and audit
 Forensics.

22.  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

23.  Russia, Israel, USA, France, Germany.
 Increasing JVs
 Indian companies looking for partners
 Tatas, Mahindra, L&T, Wipro, etc.

25.  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.

26.  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.

28. Thank You.
Siddharth Vishwanathan
s.vishwanathan@fco.gov.uk
Direct Tel: +91 22 66502195