india and uk
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Defence, Fire & Security Sector in India
Siddharth Vishwanathan
Trade & Investment AdviserUK Trade & Investment (Western India)
British Deputy High Commission
Mumbai
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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]