5 Key Trends for 2017: The Rapid Expansion of Indian Electronics Security Market

Sources indicate that in the last five years, the Indian electronic security equipment industry witnessed a strong growth of over 25% and is expected to grow at 18% in the forthcoming years. It will double its size from ` 8,000 Crore in 2016 to ` 18,000 C

If we consider the market overview of Indian electronic security systems, one can observe that it is now a norm rather than an exception. Like most other industries, the new-age security market has evolved from analog to digital systems. A typical electronic security product portfolio includes systems across intrusion and detection, access controls, surveillance, safety, etc. Sources indicate that in the last five years, the Indian electronic security equipment market industry witnessed a strong growth of over 25% and is expected to grow at 18% in forthcoming years. These will double its size from ` 8,000 Crore in 2016 to ` 18,000 Crore in 2020.

Organized real estate, growing threat perception and improving value proposition for the customers have been the fundamental growth drivers of the industry in the past decade. Though these drivers will continue to propel the industry, additional trends are expected to bring in fresh prospects for the players, which will help them to continue with the impressive growth streak.

Here is a list of five prominent electronic security trends that all stakeholders need to watch out for.

Technology Evolution

Moving beyond traditional camera devices, the

new-age electronic security market now includes technologies such as sensors, biometrics, real time connectivity, advanced processing software and analytics, which are also opening new application areas.

Need for automated security solutions and increased application by government is fuelling the demand for the new technology solutions. Reports suggest that the domestic biometrics market is expected to have a CAGR of 31% (2016-21) and the fingerprint sensor market growth is expected at a CAGR of 18.9% (2016-22). This would require the players to increase investments and build capabilities. Additionally, 90% of the current installed surveillance systems are still analog. (A strong case exists for upgrade to digital technologies). Research estimate suggest that the IP surveillance market is expected to grow 1.5 to 2.5 times faster than the average market growth of 18%.

Rise of New Business Models

Instead of providing off the shelf products, suppliers now give customized end-to- end offerings ranging from location evaluation, installation to monitoring support. So, it has transformed from being a security and surveillance products sector to a solutions industry. Soon these new security solutions could provide business intelligence as well.

However, industry players will drive investment to tackle key challenges such as consumer awareness and technical capabilities. The e-SaaS business is deemed as the new growth engine of the industry. A pathbreaking milestone for the sector is the subscription-based security service which has the potential to substantially change conventional business models.

Widening Geographical Spread

The Tier-I and III cities are expected to generate demand for security systems across establishments. The two key factors driving demand are faster real estate growth in large tier II cities, which are witnessing an estimated growth rate of 10-15% p.a. The drivers (such as increasing penetration of home loans and affordable property prices) seem stronger for Tier II. Hence, they are expected to create more demand for security solutions. The government’s Smart City Phenomena is set to add to the demand for electronic security. For instance, the scale of this estimated demand can be measured in comparison to cities like Beijing and London, where over 4 Lakh CCTVs camera are installed in public spaces. The government will be a dominant and important client for security system is inevitable.

Emerging Government Intervention

What generates the demand for safety systems and increase the compliance rate is the increasing focus on implementation of stringent safety systems. For example, the Mumbai fire brigade has notified high rise apartments, stars hotels and assembly buildings regarding mandatory adherence to Fire Safety norms. Additionally, states such as Tamil Nadu and Maharashtra have already made it mandatory for all private institutions to have CCTV surveillance.

Declining Hardware Cost

Increasing competition between electronic system manufacturers and government interventions will benefit system integrators eventually. For example, the Make in India drive, along with specific schemes such as M-SIPs are incentivizing domestic electronics manufacturing industries. Incentives as high as 20-25% subsidy on capital expenditure would make electronics manufacturing a more profitable venture.

However, low equipment cost will improve the value proposition offered to customers, and enable availability of higher specifications and functionalities at same prices.

In our opinion, the above trends if appropriately leveraged, would result in “Higher than Industry” growth rate. To make these possible, firms must have a clear strategic roadmap chalking out focus areas, investment plans for capability enhancement, product development roadmap and Go-To market strategy.