Policy Reforms Agenda for the Indian Private Security Industry
FICCI10th November Private Security Sector – Priority Agenda 2012
Indian Private Security Industry – Vital Sector of Our Economy ! Estimated Industry Size : INR 18,000 – 20,000 Crs (2011). A business enabler – link to GDP. Projected growth rate : 15% - 17% pa (2010 – 2015) Employs over 50 lac individuals. Offers services to lakhs of B2G, B2B & B2C segment clients Man Guarding constitutes +60% of the sector. Followed by Electronic Security (+25%) and CIT (~8%) Man Guarding : ESS revenue ratio changing rapidly. Thrust on technology and compliance. Fragmented BUT consolidation has commenced. Top 10 Players hold ~ 25% of the market. Projected size in 2015 : USD 7. 5 Billion. ~ 4% of World Market. Amongst 10 largest markets. 8.0 7.5 17.0% 0.2 7.0 6.0 15.1% 2.4 21.4% 4.7 5.0 0.1 18.8% 21.5% 0.8 4.0 3.2 1.5 24.8% 21.7% 24.0% 3.0 0.1 0.9 0.4 26.8% 1.8 31.6% 14.9% 2.0 0.2 4.1 1.1 2.7 1.0 1.9 18.8% - 2005 2007 2010E 2012E 2015E Manned guarding Cash services ESS Consulting, Training Others2 Source : Media Reports and Security Industry estimates
Indian Private Security Industry & PSARA (2005) Five Point Programme 1. Restricting un licensed PSAs to expedite PSARA Implementation 2. Provision of Arms Licenses for PSAs 3. ‘Gradation’ of PSARA licenses 4. Clarification by MHA on PSARA (2005) applicability to NON guarding services segments 5. Clarification by MHA on Jurisdiction of Maharashtra Guard Board Vs PSARA in state of Maharashtra3
1. Restricting un licensed Private Security Agencies to Expedite PSARA Implementation Background Licensing Process taking unduly long owing to basic issues – Inadequate infrastructure and staff allocation to State controlling / licensing authority offices In some states, PSARA responsibility being held as ‘additional charge’. Frequent changes. In few states, Senior level officers not appointed as Controlling Authorities. Slower decisions. Improper completion of license application forms by applicants Genuine process hurdles that need to be addressed - Verification of Directors. Specially in case of companies with Directors from Multiple states Non acceptance of verifications already conducted by others licensing authorities Lack of clarity / alignment between licensing authorities of different states on – Acceptable training content ? Training provider ? Requirement of separate license to operate security training institution ? Validity of security training certificate received in one state while operating in another state ? Delays in issue of licenses and the fact that there are more un licensed operators than licensed PSAs (in most states) is adversely affecting the4 validity of PSARA and encouraging PSAs to take the Act casually.
1. Restricting un licensed Private Security Agencies to Expedite PSARA Implementation Recommendations All States & UTs be given a timeline to complete Framing of Rules and to allocate adequate staff & infrastructure to support workload States to declare final cut-off date for ALL Private Security Agencies to obtain licenses Thereafter, PSAR License to be made mandatory for Service Tax & PF registration / payments by PSAs List of Licensed PSAs be hosted on State Home Department Websites. Official restriction on engagement of Unlicensed Security Agencies by users. Wide publicity in local media by state Licensing Authority Quarterly Review through State Level Security Associations Annual Review by MHA with State Licensing Authorities and Central Industry Associations5
2. Provision for Arms Licenses for Private Security Agencies Background Private Security Agencies (PSAs) are involved in security of various establishments that essentially require Armed Security. For example – Cash in Transit services for banks – 1.03 lacs ATMs (Nov, 2012). Additonal1 lac ATMs by 2014. Static Guarding of ATMs and Bank Branches Guarding of Jewelry Stores, fuel stations, toll booths etc In view of recent incidents, even other customer segments are pressing for Armed Security staff – Manufacturing Sites (Maruti incident -2012, Hyderabad Incident - 2011, Greater NOIDA Incident - 2010) Hotels (Post 26 / 11) IT / BPO sector (post 26 /11) A high level industry estimate provides that PSAs engage between 30,000 – 50,000 Gunmen. In the absence of provision for Arms licenses to licensed PSAs…….industry is forced to hire persons with questionable credentials just because they hold Arms licenses in private6 capacity. This is leading to proliferation of fake arms licenses.
2. Provision for Arms Licenses for Private Security Agencies Recommendations It is recommended that licensed Private Security Agencies be granted Arms Licenses and allowed to procure and use ‘Retainers’ in similar lines as Banks. This does not require any new legislation; Home Ministry Circular of 1987 has a provision for the same vide exemption to certain clauses of the Arms Act (Circular No. V-11013/2/87 - Arms New Delhi 8th December,1987) Licensed PSAs could be issued Arms licenses (12 Bore DBBL Guns only for Armed guards, 0.32 mm Revolvers for Body Guards) as per the following suggested criterion: Proven business needs, such as: Operation of Cash/Bullion transportation/ATM Replenishment Services - each cash van requires two armed guards Contracts/Work Orders to provide Gunmen/Body Guards 5% Reserve holding in addition to the above. This will provide requisite flexibility to the licensed Private Security Agencies to cater for new business demands, as also to hold the weapons returned from closed contracts.7
2. Provision for Arms Licenses for Private Security Agencies Benefits of the Amendment For Users of Private Security – Availability of trained and verified armed security staff through licensed PSAs ; in required numbers to protect their business establishments For Private Security Agencies – Ability to meet customer demand Ability to meet compliance requirements of local police Relief from un fair bargaining power in hands of individuals holding Arms License in private capacity For State Police Department / Private Security Licensing Authority – Better control on Arms used by PSAs – accountability of licensed PSAs Provision of Armed Security for thousands of vulnerable establishments like hotels, jewellery stores, toll plazas, CIT vans etc in a regulated manner General improvement in standard of service rendered by PSAs by placing eligibility thresholds for Armed Security License (only the most reliable PSAs to get Arms Licenses ?)8
Suggested Framework for Issue of Arms Licenses to Licensed PSAs under the Retainer Ship SchemeS.No Issues Recommendation PSAR License holder with clean track record. Eligibility Criteria for Corporate Arms License as Private Atleast 5 years since Incorporation 1. Security Agency Proven business need (contracts) Verification of infrastructure and capability to hold Arms Retainer System as per Arms Act 1959. Company – License Holder. Who holds the weapon – process for Retainer ship / 2. Retainer as per Arms Act- Weapon user Multiple Retainer Multiple Retainer should be (max 3 as per Arms Act) 3. Responsibility and Liability for use of arms Holder + Retainer as per Arms Act & Rules 1959 4. Process for safekeeping of weapons As per Arms Act 1959 – schedule for dealers / stockist. Company applies through a defined process under Arms Act 5. Corporate Weapon License application process. 1959 – New form for PSA to be designed. Retainer applies through a defined process under Arms Act 6. Retainer License application process 1959 – New form for PSA to be designed. All PSA’s will mandatory replace all armed guards with Replacement of “Private Weapons” currently in use by 7. “Corporate License – Retainer-ship model” under this Industry / PSA’s notification within 2 years. 8. Type of License State level license only 9. Type of Weapon Non-prohibited Bore As per proven “Operational Requirement” validated by10. Number of Arms Licensing Authority with end user establishment Post “Retainership” and pre-deployment at site Private Security 11 Training process for Retainers Agencies (License Holder) will ensure that Retainer is trained.
3. Introduction of ‘Gradation’ in Private Security Licenses Background Presently the end users of Private Security services have no way of distinguishing between security companies based on – Track record of service quality Scale of operation Variety of services rendered Experience in the industry As a result, dubious non compliant security agencies compete on security contracts that are way beyond their capability and end up risking lives and assets. Grading of Security Services is already in vogue in various countries that have existing legislations for regulating Private Security sector. In India, various government departments have adopted a similar gradation system. For example, CPWD has a system of grading contractors. If ‘Gradation’ of licenses is introduced, PSAs will have motivation to maintain and improve the quality of services so as to achieve a higher gradation / rating. This in turn will result in healthy competition between licensed PSAs and ensure greater focus on service quality. Such a scenario will not only benefit end users of security services but also assist the controlling authority in achieving the objectives10 of the PSAR Act.
3. Introduction of ‘Gradation’ in Private Security Licenses Recommendations A system of “Grading” Licensed Security Service Providers could be laid down. One suggested Grading system is placed below for consideration : S.No Attribute Detail Grading Above 50000 A 10000 – 50000 B 1 Number of Guards 5001 – 10000 C Less than 5000 D Excellent track record on compliances 1 2 Quality of Service Average track record on compliances 2 Below average track record 3 Man Guarding only MG Security Training Infra & Capability TRG 3 Domains of Service Electronic Security Systems Capability ESS Cash in Transit Capability CIT 4 Experience Year of grant of license under PSARA Year11 Example: B1/MG_TRG/2006
4. PSARA Applicability on Service Segments other than Guarding Background Private Security Industry comprises of various services other than manned guarding. For example - Cash in Transit Electronic Security Products & Services like alarm monitoring Detective & Investigative Services (Bill pending) Security Training & Consultancy Guarding to non guarding revenue ratio changing fast. Non guarding services constitute almost 40% of the current industry size. Customers view these services as part of private security industry. These services are often high risk and are largely unregulated. For example, Cash in Transit sector Operates over 10,000 cash vans across every corner of the country Ferries thousands of crores of cash daily. Incidents are becoming a regular feature. It is unclear whether services like CIT and Remote Alarm Monitoring & Response fall under the ambit of PSARA (2005). Different state licensing authorities have divergent views. MHA Clarification essential.12
5. Maharashtra Guard Board Vs PSARA applicability in State of Maharashtra Background State of Maharashtra saw creation of the first set of security companies in the country in late 1960s – early 1970s Even today Maharashtra is the single largest market for private security services Over 5000 security companies operate in the state of Maharashtra Maharashtra Guard Board was created in 1980s under a state level legislation. Maharashtra Guard Board has acted as a “regulator cum competitor” to private security companies for over three decades Even post implementation of PSARA in Maharashtra state a few years back. Private security companies continue to face challenges at the hands of Maharashtra Guard Board MGB continues to challenge the legal position of companies licensed to operate under PSARA Controlling authority for the state of Maharashtra It is unclear whether a Private Security Agency needs to be licensed under PSARA or under Maharashtra Guard Board Act or both to operate in Maharashtra ? Current situation is resulting in confusion in the minds of end users and harassment of PSAs.13 MHA clarification – intervention essential.