Standardisation and generous government spending would go a long way in boosting the security market, feel industry experts
By Richa Chakravarty
Wednesday, September 11, 2013: The Indian CCTV market grew by 20-26 per cent in FY 2012-13. Even though the demand for CCTVs has been rising fast, in India the industry is still at a developing stage. Manufacturers, integrators as well as solutions providers face several challenges, which are preventing the industry from flourishing. “There are infrastructural issues constraining the industry. The challenges include the lack of a trained workforce, people’s lack of readiness to trust newer technology, the lack of standards, etc. Generous government spending would go a long way in boosting the security market,” suggests Hemendu Sinha, B2B head, LG India.
Adds Rajendra Lad, deputy general manager, service and sales, Zicom Electronics Security System Ltd. “Players in this industry have to work against challenges like the lack of awareness among people and ignorance about the easy availability of security solutions. There is also a high ownership cost, the negative impact of products from the unorganised sector, extremely price-sensitive consumers, etc.”
Electronics Bazaar set out to find the challenges being faced by this industry and recorded the solutions suggested by industry experts.
A fragmented market
The Indian CCTV industry is sharply divided into the organised and unorganised sectors. Almost 50 per cent of the Indian market is unorganised and is flooded with inferior security products from other Asian countries. The remaining 50 per cent includes big multinational players like Bosch, Samsung, Sony, LG, etc, who have already created a brand name worldwide. There are also some small players that are adding significantly to the growth of the Indian CCTV sector. However, the industry suffers because the unorganised sector floods the market with poor quality products that are priced very low. With India being a price-sensitive market, it becomes very difficult for players from the organised sector to compete with cheap sub-standard products. “The Indian security industry is largely dependent on imports, as the organised sector is mainly focusing on meeting global standards for safety and security,” says Rajendra Lad.
Also, there are local vendors who procure products from various countries and brand it themselves, ignoring the poor quality of these products.
The organised sector, too, has its own share of challenges, wherein indigenous manufacturers (which are very few in number) have to compete with big brands. In the absence of a level playing field, these players are finding it tough to grab a market share. Despite the fact that there is a huge market in India yet to be tapped, these small players find it difficult to maintain low prices, while offering quality and brand value.
The solution: Educating consumers about the pitfalls of buying poor quality products just because they are low in cost is the only solution for the industry. Suggests Maulik Shah, CEO, Autocop Group, “To overcome this challenge, a company should strengthen its channel partner base, and enhance pre- and post-sales support to partners and systems integrators. Apart from offering strong service support to end customers, we should educate customers about buying genuine products from genuine companies. It is important that organisations and individual clients focus on the quality of the product that is being installed at their premises. The consumer should insist on procuring products that come with an in-built warranty against any manufacturing defects.”
Players are making strong efforts to support their customers through added services and by generating awareness about the technology used and the importance of quality. Key players are now moving out of selling products to providing complete solutions. This solution-centric approach is doing well as consumers are happy to pay for solutions based on their requirements. Opines Sudhir Tiku, senior general manager and country head, Bosch Security Systems, India, “There is the challenge of commoditisation that had taken place in the mid and lower segment of the market. For the Indian market, manufacturers will have to localise their offerings and create differentiated products to create all-round demand.”
Lack of standards and industry recognition
The absence of a regulatory framework is also a major hurdle. “There are different products, technologies and guidelines involved, which often hinder collaborative monitoring of the entire solution. Some systems are analogue-based, some IP-based and some are hybrid, so integration of these systems becomes a major challenge due to lack of a common standard. As there are no defined guidelines, companies are free to choose any standard. So, complete cohesive monitoring becomes quite difficult,” informs Anand Navani, country manager, Verint Systems India Pvt Ltd. As there are no standards pertaining to the quality and safety of the products, India has become a dumping ground for sub-standard security products.
Adds Anand Navani, “Due to lack of standardisation, the decision-making process becomes slow.”
“As far as recognition of the sector is concerned, we need a strong association or body which can safeguard the interests of the local manufacturers in this domain. The government initiatives are also negligible, and the industry needs an active representation in the government trade associations,” opinions Kaushal Kadakia, product owner, video servillance solutions, Matrix Comsec Pvt Ltd.
The solution: It is necessary for the government to recognise the security sector as an industry. “The government must realise the need and the importance of the electronic security industry to the common man. Only when the security sector gets due recognition as an industry, will standards be fixed and policies can be framed around it,” says Sanjeev Sehgal, managing director, Samriddhi Automations Pvt Ltd. Echoing the same viewpoint, Rajendra Lad adds, “To make the industry strong, we need help from both the government and the public, especially on the regulatory front. This includes the standardisation of the business and recognition of our services as a supplement to the security of society, in general.”
Suggests Sudhir Tiku, “Standards related to security have to be formalised and legalised in India so that all stakeholders take security issues seriously. This also means re-educating various strata of the market about the need for security and explaining the ROI for this concept.”
Tax and duty structure
Arbitrary taxes and import duties are another hindrance making the industry unsustainable. The government levies import duty on quality components, which makes it impossible for good quality security products to be made available at a competitive price in India. The industry is of the opinion that security products should be treated as a necessity and not a luxury.
Informs Sanjeev Sehgal, “Value added tax (VAT) on security products differs from state to state, ranging from 12.5 per cent to 14 per cent. Whereas, IT products, which fall in the bracket of necessities, are charged VAT at 5 per cent across the country. Though the government has already taken some steps like introducing the Modified Special Incentive Package scheme (M-SIPS), there is still a lot to be done in more immediate and practical terms.”
The solution: Says Maulik Shah, “India is a highly under penetrated market and the government should declare security equipment/infrastructure as a basic necessity, just like energy and transportation. It should offer sops to encourage Indian firms to manufacture locally and promote exports, which will expand this market.”
Opines Rajendra Lad, “There is an imperative need for the government to consider tax sops and even declare a one-time tax holiday, as the industry is still at a nascent stage of growth. This by itself will provide a lot of relief to the public and to institutions such as the police. This will also make hardware and other security components cheaper. In the United States, electronic security systems have become cheaper due to a lower tax regime.”
Slow government clearances
Players find it difficult to seek permission from municipal agencies for the smooth implementation of projects. In India, the number of government bodies manning a city is high. So seeking permission from all these agencies becomes time consuming. Shares Anand Navani, “When there is an indoor installation, there are multiple contractors that get involved. So, coordination between them becomes a challenge. While for outdoor installations, there are certain permissions that are required from the several government bodies.”
The solution: According to industry experts, it is necessary for the government to make the execution process smooth and free of hassles. Once a company wins a tender, the government agencies should ensure that the permission-acquiring process does not delay an installation. Urban development agencies should also help to make this process smooth.
Lack of skill sets and retail facilities
The CCTV camera and security systems industry requires the right kind of skills for installation, integration and software development. For any small or mid sized organisation, this becomes a challenge. Large systems integrators have relevant skill sets; they also outsource some portion of their jobs which they are not competent enough to execute – something that small and mid sized players are not capable of doing. “Compared to big and established players, small or new firms find it challenging due to the lack of properly trained personnel. Though this issue does get resolved eventually, it takes time. Currently, these firms are going through a learning phase and, hence, their lead times are more,” informs Anand Navani.
Another hindrance is the lack of retail facilities. According to Padmadas Nair, country head, CP Plus India, “There is a shortage of dedicated retail facilities for security and safety products, and even the large format retail stores offer very limited products and brands. There are no avenues where the customer can experience or garner awareness about the latest innovations and technologies in this field.”
The solution: Better awareness and engagement with OEMs can help fill this knowledge gap. Consumers should be aware of the fact that products sold by genuine companies have their own manufacturing units, hi-tech labs and excellent after sales service. Hence, they can offer quality products. Also, the players should build a good channel network that can help buyers find the right products in the market, easily.
“End users of security products generally succumb to low price products, compromising on quality. Manufacturers suffer immensely due to this unfair competition. We, therefore, need to make the consumers more aware of the quality of products,” concludes Kaushal Kadakia.
Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine
