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Learning Lessons from Lebanon Pager Blasts – Modi Govt’s ‘Latest’ CCTV Crackdown can create havoc for Chinese Companies

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The Modi govt is looking to immediately operationalize its order that will likely weed out Chinese vendors from the supply chains of all forms of surveillance equipment in the aftermath of the recent coordinated pager explosions in Lebanon.

The move is set to benefit local companies.”In light of the pager explosions, critical sourcing of certain components or parts of the supply chain will be looked at in a big way by the government.

“The government’s policy on surveillance cameras is likely to come into effect on October 8. Once it comes out, all the Chinese players will be out of the picture, and Indian companies are likely to gain.” While the gazette notifications came out in March and April this year, sources said the government has accelerated its implementation and sharpened its focus on security after the Lebanon explosions. The government is set to fast-track the implementation of guidelines on CCTV cameras, which will allow players from “trusted locations” to sell in India.

The emphasis on CCTVs predates the pager explosions. The guidelines on security certification were issued in March and will come into effect in October. It is less about explosions and more about leakage of data that includes sensitive data as CCTV cameras are also installed at sensitive locations and can be used to track movements of people.

You do not want to be using cameras that are not made in trusted locations–and for that purpose.”Visibility & controlThis person said a ‘trusted location’ would be one where New Delhi has visibility on the entire manufacturing chain and is convinced that the manufacturing chain is ‘okay’ and that there are ‘no backdoors’ in the equipment, which will either leak or take data out. While this person ruled out a “rip and replace” policy at this point, he said it was something that could be in the works eventually.

“There is an order that to ‘Make in India’, these are the implications—that is one part of it,” this person explained. “The second order relates to what can be sold in India—what are the security standards of equipment that can be sold here. So, there are security standards that are being prescribed for that. In addition to the BIS (Bureau of Indian Standards) quality assurance requirements, the government is adding security as one more factor that needs to be considered.”

Varun Gupta, research analyst at Counterpoint Research, said the notification that prescribes standards brings out ‘stringent checks’ on hardware and software of surveillance equipment.”The motive is to make these products more secure by introducing a layer of certification through relevant authorities and by mandating the use of secure elements in these cameras for enhanced security,” he said. “

The immediate measures for all companies in the surveillance market will be to adhere to the new regulations by improving the localisation of contents going into these products which will benefit Indian vendors.”R&D investmentsCounterpoint’s Gupta also warned that this could impact some companies as they will have to invest heavily on R&D and that may hamper their growth in the short term.

“Currently, CP Plus, Hikvision and Dahua control more than 60% of the market in India and they will have to step up their efforts in improving the localisation content in their surveillance portfolio and double down on R&D,” Gupta said.CP Plus is an Indian company while Hikvision and Dahua are Chinese players.

It is important to note that in November 2022, the United States government, through the Federal Communications Commission (FCC), banned the sale of equipment from Hikvision and Dahua due to “unacceptable risks to national security”.The FCC declared the companies a threat to national security after concerns that their equipment could be used by China to spy on the US.

Those in the know also said that lately, the Indian government has been rejecting Chinese CCTV equipment tenders and has been preferring European players like Bosch. Notably, it is estimated that Bosch is around 7-10x more expensive than its Chinese counterparts.

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