FDI limit for private security agencies hiked from 49% to 74%

The Centre on Monday increased the Foreign Direct Investment (FDI) limit for private security agencies from 49% to 74%. While 49% is through the automatic route, beyond this it would be through government approval route.

The FDI in private security agencies is subject to compliance with Private Security Agencies (Regulation) Act, 2005.

The global private security services industry is estimated to grow at 7% to reach $220 billion by 2019. However, the Indian private security services industry is expected to grow much faster at 20% over the next few years, and is estimated to grow from Rs 365 billion in 2013-14 to Rs 640 billion by 2018-19, according to a Federation of Indian Chambers of Commerce & Industry (Ficci) study.

The Central Association of Private Security Industry (CAPSI), an apex body of private security agencies, cautiously welcomed the move saying the government needs to be on extra vigil while allowing foreign investors.

CAPSI governing council chairman Kunwar Vikram Singh said an amendment should be made to the existing Act to allow the increase in FDI limit.

“We will welcome the opening up of the sector. But at the same time, we want the government to be cautious,” Singh told DH.

He said the Ministry of Home Affairs (MHA), which monitors the functioning of agencies, would have to ensure that the agencies and investors coming to India to put more money should be thoroughly valuated.

“It is not more about money alone. This has to do with the country’s security. In the process of granting permission, they will have to be serious enough to check the investors credentials,” he said.