India and UK

8/12/2019 India and UK

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04/08/2014 2

Defence, Fire & Security Sector in India

Siddharth Vishwanathan

Trade & Investment AdviserUK Trade & Investment (Western India)

British Deputy High Commission

Mumbai


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04/08/2014 3

India the sub-continentof contrasts

Land area of over 3.2 million square Km; 7thlargest country

Union of 29 states (including the city of Delhi) and 6 Unionterritories spanning snow capped mountains, tropical rainforests, 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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Indias Economic story

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 2010o Interest rates approx 10%


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Indias Economic story: InfrastructureDevelopment


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Construction

Industry valued at 50 billion Second largest employer after

agriculture - 31 million people

Contributes 20% of GDP

Ranks 4thfor FDI inflow Growing at 9% per annum

Phenomenal growth in urbanisation has led to hugeunmet demand for housing, retail and commercialspaces

150 new Special Economic Zones

28% of population in urban environments

To rise to 40% by 2012


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Airports

Airports - Passengertraffic to grow 10%

Flight cargo by 7%

Plan to modernise 35non-metro airports anddevelop seven greenfield airports

Nagpur cargo andpassenger hub

Navi Mumbai airport?


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Ports

Largest merchant shipping fleet amongstdeveloping countries - 17th in world

Cargo through 12 major ports has grownannually at 9.5% per year over the last 3 years

50 projects valuedat US$13 billionplanned

7 ports to bedeveloped inMaharashtra andGujarat


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Looking at India???

Lets give it a shot

The statistician

Make the quick buck The investor


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Key Success Factors

Strategic thinking

Forward Approach

Market Perseverance Due Diligence

Solid Partner


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Key Drivers

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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Key regions in India for thesecurity market.


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Classification of the sector

Defence Armed Forces - Military hardware, software, equipment,

consumables and technology. Homeland securityrequirements of paramilitary, police, fire

services.

Critical National Infrastructure Protection.

Commercial Security Physical Security Cyber security

Research & Development for Security. Education, Consulting & Training for Security.


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Defence

Recent reports suggest government spending on approx. 5 billion pounds onhomeland 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.

10thlargest defence spender.

70% procurements from overseas. (efforts towards indigenous production ???)


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Commercial Security

Physical Security- Pegged at 1.1 to 1.3 billion pounds

- Generally understood as electronic security, perimeter security, fire safety, currencyhandling 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, residentialcomplexes, hospitals etc.


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Security Market

I

India Security Market

SegmentationBasis

Segments

Surveillance

CyberSecurity

PhysicalSecurity

Systems Services

AccessControls

AlarmSystem

FireDetection

andProtection

Others


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Commercial Security 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%


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Research & Development

Had been restricted to central Govt. funded projects.

Recently large private players and R&D startups involved

Areas of R&D.


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Consulting

Security Planning and Management

Policy

Loss prevention

Systems consulting

Certifications and audit

Forensics.


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Electronic Security Govt. initiatives

Both Union and State governments looking to put forthregulations 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 safetyequipment


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Overview of competition

Russia, Israel, USA, France, Germany.

Increasing JVs

Indian companies looking for partners

Tatas, Mahindra, L&T, Wipro, etc.


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Supply Chain


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Regulatory Environment

Highly regulatednumber 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.


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UK India : The Bilateral Scene

UKs Exports to India (2009) UK 2.893 billion (4.1 2008)

Principal Exportscapital goods, gold, ferrous & non-ferrousmetals, electronic goods, chemicals and pharmaceuticals.

UKs Imports from India (2008)UK 4.325 billion

Principal Imports Readymade garments, gems & jewellery, agriproducts, leather goods, chemicals and pharmaceuticals

UK is Indias sixthlargest trade partner

Educational Co-operation:44,000 Indian students currently

studying in the UK; They constitute the 2ndlargest number ofinternational students after China;

Over 226 UK institutionsvisitedIndia over the year.


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Thank You.

Siddharth [email protected]

Direct Tel: +91 22 66502195
mailto:[email protected]:[email protected]

India and UK

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