The Indian private security market is expanding at rapid pace, expected to have an annual growth rate of 9,93%. While some major players need to comply with the Private Securities Agencies Regulation Act 2005 or the Payment of Wages Act 1936, 65% of the market is comprised of smaller, unorganized agencies.
In this rapidly evolving sector of the economy, questions concerning quality, reliability and accountability are emerging alongside the growing number of agencies. Additionally, working conditions are oftentimes far from ideal and, for instance, security guards do not always benefit from adequate training. To better understand how this sector can meet international standards, ICoCA had the opportunity to interview Pratap Heblikar, former special secretary of the government of India and one of the founding members of Maxgrid Securicor, a security consultancy company established in Bangalore. In the following interview, Mr. Heblikar gives an overview of how the Indian security sector has evolved in the past decade, its current relation with the government and what is to be expected in the future.
How has the understanding of national security in India evolved in recent years ?
National security in India is no longer understood in its narrow military terms. It has now more stakeholders than ever before. Many new entrants from the private and corporate sectors, Non-governmental Agencies including government and private think tanks and universities, both private and public, and academia are participating in its ambit. The government too realizes that this accretion will add to India’s national comprehensive strength. Technology factor is becoming the driver for rapid economic development. Technology therefore is going to be the key for the government to dominate the security and intelligence space in the country. Both technology and governmental requirements are now interlinked and interconnected. They can no longer operate in the “silo” mode. In this scheme of things, the corporate industry in India has a strategic role to play.
How significant is the private security sector in India and what are its credentials ?
To reiterate, the private security sector in India serves as a link between the government and the industry’s needs. It is India’s largest corporate taxpayer and employs over 7 million personnel, with this number growing each year. The sector is valued at approximately INR 400 billion and is expected to grow at a compound annual growth rate (CAGR) of 20%. While it has a predominant presence in Tier-I and Tier-II cities, it operates in approximately 550 districts across the country. Furthermore, initiatives like Smart Cities, “Make in India,” and “Digital India,” along with the retail boom and increasing urbanization, will necessitate significant changes in the way the industry currently operates.
What are the key growth drivers for the private security sector ?
The private security sector has emerged into a major industry by virtue of the employment of a large body of manpower, both skilled and unskilled, to meet the burgeoning demands of the corporate sector across the SMSE spectrum. Key drivers for the exponential growth of this sector are attributed to the increase in urbanization, increasing perception of insecurity amongst the civil society, emergence of contained commercial complexes and residential townships, shortage of police personnel. Also, the fact that running a security agency is currently a profitable business model due to limited government oversight on quality and the willingness of clients to compromise on standards. The existence of large numbers of agencies are making monitoring of quality, reliability and accountability an administrative challenge.
The expectation from this sector will increase exponentially when under the Make in India, Digital India, Smart Cities program and other initiatives, the distinction between public and private sector will get blurred, as strategic sectors will be thrown open to participation by corporate players both Indian and foreign.
What challenges does the private security sector face ?
The strategic importance of the private security industry in India is evident, attracting significant interest from both international and domestic investors. One major challenge is the growing demand for quality and transparency from customers and the government. This heightened demand is difficult for small firms to meet, which threatens their survival in a competitive market. As a result, there is an imminent trend towards consolidation or buyouts of smaller firms by larger entities looking to capture a greater market share. Additionally, Private Security Agencies (PSAs) are increasingly becoming targets for investors due to their ability to combine high growth rates with high returns on capital employed (RoCE). This situation presents both an opportunity for well-positioned firms and a challenge for those unable to meet these performance expectations.
What other developments are expected in the private security sector and its regulation ?
One worth mentioning is the integration between corporate insurance and high-end professional security services. A major growth spurt is expected in Tier-III cities. The resources of the central and state governments to protect national assets and interests are stretched to the limit, making it nearly impossible to extend their limited resources to other areas. Despite this, the central and state governments have devoted less attention to creating credible alternative systems to take on the responsibilities of “watch and ward” and “research and development” from state institutions.
The focus of security solutions in India has remained state-centric, emphasizing law enforcement and the prevention of terrorist-type attacks. It is still at a preliminary stage of conceptualization regarding everyday security concerns of the common man and the safety and security of critical corporate infrastructure. The ability of the corporate sector to protect itself against hazards of industrial espionage, subversion and sabotage remains a matter for discussion and action.
The Ministry of Home Affairs is the nodal ministry supervising the provisions of the Private Security Agencies Regulation Act and it is currently looking at this from a purely regulatory point of view. The role of the state governments and union territories is also mentioned in the PSAR Act. There is a need for constant review of the act’s provisions to ensure that it remains competent and capable of meeting contemporary challenges.
Can you highlight one aspect that is still underdeveloped and would need more attention in the sector ?
While delivering a key note address entitled “Cybercrime, Pandemics, Industrial Disasters and Fire Safety” at the 33rd Annual Conclave of the Institute of International Safety and Security Management (IISSM) in 2023, I emphasized on the need to (a) Create awareness of national security in the Indian context (b) Capacity building and (c) Skills development. I dwelt on each item in a substantial manner and urged the participants to focus on the above subjects and advised the sponsors to look proactively at raising the private security industry to the next level. The Rashtriya Raksha University (RRU), an institute of national importance under the Union Home Ministry, has an exclusive centre for the private security industry which holds regular workshops, seminars/webinars and conferences and is brains-trust for the government on the subject. The Central Association for Private Security Industry (CAPSI) based in New Delhi looks at all aspects of the industry and interacts regularly with the stakeholders. There are many other such institutions in this segment. The Centre for National Security Studies (CNSS), Bangalore, is looking at private security industry as part of its Non-Traditional Security curriculum.
How can companies improve their approach to handling critical security issues ?
Small, medium and large-size firms dealing with critical activity must create an entity within the organization devoted exclusively to security including cyber security, IT/ICT, communications network and governance directly responsible to the CEO or COO with a single command point. The role of a CISO in cybersecurity-related matters has today assumed a critical role. Separate budgets and professional leadership are recommended. Central Public Sector Undertakings (CPSU) and State-Owned Enterprises (SOE) should be included in its ambit.
What steps should the government take to improve the governance of the private security sector ?
The Ministry of Home Affairs (MHA) would need to bring in other ministries and departments to the PSARA platform, such as the Ministry of Skills Development, Ministry of Defense, Ministry of Information Technology, Ministry of Corporate Affairs, Ministry of Labor, Industry and Commerce to make the governance of private sector security industry broader-based, purposeful and in the public interest. The need to create an apex industry association is necessary to ensure greater interaction with the government with advice, suggestions and recommendations.
The salient point here is for the government to create space for the industry to assume greater responsibility in areas, where its skills and expertise are required leading to the substitution of government forces/agencies resulting in their ultimate deployment to other critical areas. There are several areas where the private security industry can be expected to assume a leading role in securing domestic airports, minor seaports, non-sensitive railway installations and later metro stations. Another area that needs to be examined is how to reduce the number of ancillary functions performed by the state police forces by outsourcing to the PSA.
Obviously, induction of PSA into this domain has to be done after careful thought and examination of statutory and legal provisions. There is a compelling case for the creation of different categories of private security agencies to meet specific requirements of the industry. Man-guarding segment is itself a large one ranging from simple to sophisticated deployments. Garment industry with export markets to the West and the USA have to adopt CT-PAT standards which require better skills as compared to those in residential complexes or small and medium establishments.
What areas require a higher degree of specialization within the private security sector and what would be the benefits ?
There are areas such as vast educational complexes, huge hospitals, Malls, IT/ICT campuses with large foreign participation and even research companies. These are high-risk sectors requiring better quality asset protection standards. The role of technology as a force multiplier is advocated in such cases.
Today the scope of a PSG (Private Security Guard) has expanded considerably to include Prevention of industrial espionage, High-value asset protection, Facility management, Management of Electronic Security Systems and Emergency Response to name a few. However, the response from PSAs in general does not adequately come up to the mark in terms of a consistent quality of personnel, service delivery and accountability.
Apart from their critical functions, PSGs now provide skilled technical services including the operation of X-ray machines, metal detectors, canine units, emergency response teams, bodyguard services, bomb and explosive detection, and CCTV surveillance.
The change in perception has to start from somewhere and legislation is by far one of the best places to initiate a change that has potential national security repercussions.
By investing in human capital, we can not only address vulnerabilities but also create a wave of employment opportunities within industry. This involves preparing the private security sector to take on greater responsibilities in employment, recruitment, training, and skills evaluation. A strategic plan is essential to ensure that the industry is well-prepared to meet these challenges and serve as an effective line of defense in the corporate sector.
The private security industry in India has several accolades to its credit especially during natural disasters and calamities. The industry rose to the occasion as a single-individual during the coronavirus (Covid-19) pandemic especially when it was not trained to tackle the problem. It also met the challenge of tackling the menace of floods, fighting major fire incidents and evacuating people from earthquakes and other emergencies. In many other cases, it proved its mettle as a reliable service provider beyond the call of duty.
The pandemic also exposed key areas for improvement. It had many key takeaways: creating a robust cybersecurity system, combating grey zone warfare or disinformation campaigns both internally and emanating from across the frontiers, focusing more on political risk management and business risk management, inducting technology and judicious employment funds for R & D, leveraging information to deal with non-traditional security such as maritime security, terrorism, and cybersecurity, and aligning with like-minded institutions in friendly countries for the exchange of information, best practices, and training of human resources.
In your opinion, what measures can be taken to ensure that the sector in India continues to grow while meeting regulatory standards ?
The private security sector in India is already a major contributor towards providing gainful employment to a vast majority of people who by virtue of economy, education and other factors, would typically be challenged to find a decent alternative to unemployment.
The overall intention is not to deprive these resource pools by regulating and creating standards that they cannot (yet) meet, but to:
Firstly, create guidelines for eligibility, at employee and employer levels. This should go hand in hand with reforms and revisions in legislation at both Central and State levels.
Secondly, create the means by which this potential workforce may apply for affordable training and certification, making them eligible as per guidelines framed by the Center and the State Governments.
Thirdly, through differentiation between conventional/general security and specialized security services, ensure that the industry taps into the vast potential of both former civil and military personnel/ Law Enforcement/Intelligence personnel, who can easily step up to the demands of specialized services in the civil/corporate vertical.
Finally, create a pan India format, no different from any other skilled professional course (Engineering, Medicine, Management etc.) for the various levels and types of private security training that is required by the Indian market.