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INSIGHTS

India budget 2022: not much to cheer for the physical security industry

India budget 2022: not much to cheer for the physical security industry
While India's 2022 budget provided incentives for drones, AI, and 5G, the real physical security industry was ignored.
Earlier this month, the Indian government announced its budget for 2022, presenting a roadmap of investment and development plans for the year. For those unfamiliar, this is a key annual event that industries and investors watch out for. Often, it’s greeted with a mix of excitement and disappointment depending on the market expectations.
 
To put it bluntly, this year’s budget doesn’t bring much to cheer for the physical security industry. Even in the budget speech that the finance minister made, the closest reference to anything related to physical security was about drones. But drones have just a niche role to play in a country where the vast majority of areas remain unmonitored and unprotected.
 
“Last few budgets have focused on startup ecosystems, and its impact on our economy augurs well for our economy,” said Pramoud Rao, MD of Zicom Electronic Security Systems. “The new buzzwords are drones, digital, startups, innovation, etc. However, there was nothing much offered to our security industry in terms of duty cuts or any sops for ‘Make in India’.”
 
“Rollbacks and exemptions happened in some sectors but not for our industry,” Rao continued. “While some tech is going to give a huge leg up for our industry like drones, 5G, etc., all this will take time for industry adoption. Hence some concession offered will not have any immediate impact on our industry.”

The much-awaited PLI scheme

There is no need to emphasize the importance of physical security in India. According to official statistics, the number of crimes registered in 2020 was 28 percent more than the previous year. While this is a good sign as it means more crimes are being addressed, this area requires more work.
 
The local physical security industry requires more attention. A much-talked step toward this has been bringing it under the ambit of the Performance Linked Incentive (PLI) scheme that would provide incentives and subsidies for local manufacturing.

Sanjeev Sehgal, Founder and CEO of Sparsh CCTV, pointed out that the video surveillance cameras industry was announced as a priority sector under the “Atmanirbhar Scheme” last year, but not much progress has been made with regard to PLI. Atmanirbhar Scheme was a government initiative to promote self-sustainability through measures like local manufacturing.
 
“The industry is giving representations and is hopeful that PLI should be given to CCTV as a strategic product category,” Sehgal said. “Nothing has come up on that front yet. The government is very positive about electronics manufacturing, and PLIs have been announced on almost all the products. Hopefully, with the industry efforts, we should be getting PLI for CCTV cameras also.”

Only indirect benefits for now 

According to Rao, the problem is that the physical security industry does not receive the government’s attention. However, focus on emerging technologies that are making headlines these days could have an indirect impact.
 
“To my mind, our industry has yet to catch the attention of our union government like many other sectors,” Rao said. “Until this happens, nothing much is going change for us in terms of manufacturing concessions or duty cuts on critical import of components which are vital in our make in India. Having said that, the new emerging technologies like the Drone, 5G, PLI Schemes, etc., are receiving government attention, and our industry will indirectly benefit from it.”
 
Sehgal pointed out that technologies like 5G might help to improve cloud-based surveillance and remote monitoring. More importantly, initiatives such as infrastructure development plans could also indirectly boost demand for security products. The budget had announced extensive plans to develop crucial infrastructure like roads, ports, railways, logistics, etc.
 
“As the government focuses on developing new infrastructure, there will be an increase in demand for CCTV and other electronic security products,” Sehgal said. “Any development in new infrastructure will spur interest in security solutions. So that could increase demand to some extent.”
 
Sudhindra Holla, Director for India and SAARC at Axis Communications, shared similar thoughts in a note released post the budget.
 
“We are upbeat on the slew of recommendations for urban infrastructure development as this will be an impetus for not only generating employment but also reinvigorate the development of smart cities,” Holla said. “The rollout of 5G services will further the potential of technology and aid in promoting R&D and commercialization of tech and solutions.”

Robust security plans required

Besides schemes like PLI that could boost the industry, more action to increase consumer demand is also required. For instance, Sehgal suggested that a public safety act that would focus on protecting public spaces would bring attention to the importance of electronic security solutions.
 
Perhaps the physical security industry doesn’t incite the kind of excitement that buzzwords like drones, AI, and 5G do. But surveillance and access control systems are a bigger requirement in India before rushing to new technologies.
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