Chinese dominance in video surveillance poses security risk

The US prohibiting government agencies from buying products from China's Hikvision has brought to the fore the security risk of Chinese companies dominating the video surveillance market in India. While the government will have to ensure adherence to guidelines on data storage and analysis, it will also have to parallelly build a local ecosystem and provide weightage to Indian companies in tenders, say experts.

The video surveillance market has grown multifold in India in recent years with increased installation of CCTV cameras in institutions and individual homes. In the Rs 6,800-crore market of video surveillance products, Chinese companies have around 70 per cent market share.

Using an aggressive pricing strategy, Chinese companies like Hikvision and Dahua have grabbed a dominant share in the market. Further, a large portion of the components used by branded players and those sold in the unorganised market come from China.

"The government tenders favour the lowest bidder and this has helped the deeppocketed Chinese companies to dominate the market. Further, the Indian market is highly price-conscious," said Manu Tiwari, industry principal, industrial practice, Frost & Sullivan.

Some of the Indian players like Zicom have left the space due to the pricing pressure. "We moved out of the video surveillance products market a few years back as the prices keep falling on a day-today basis. We got into surveillance services, which is an emerging market,' said Pramoud Rao, MD of Zicom Electronic Security Systems.

The dominant position of Chinese companies is also posing a major security risk. "While data collection is largely risk-free, when it comes to data storage it has to be verified whether the storage happens in servers inside the country. Further, the analysed data should not go out of the country," said Tiwari.

While the government has some guidelines in this regard, adherence of these guidelines has to be strictly monitored.

The US government has prohibited its agencies from buying products from Hangzhou Hikvision Digital Technology Co Ltd, which is partly owned by the Chinese government. But experts here say banning Chinese companies abruptly will cripple the industry. "We need to parallelly develop an ecosystem of Indian companies, by providing them incentives and revising import duty structures. Further, Indian companies should be given some weightage in the tendering processes. Government should not always look for the lowest bidder," said Tiwari.

This will also open up an export market for Indian companies. Countries like the US and Australia have openly expressed their reservations about Chinese firms. Further, the higher tariff rates for Chinese products in the US will help Indian firms.