BUSINESS PLAN TO START

A PRIVATE SECURITY
AGENCY (PSARA LICENSE)
 CONTENTS
A. PRIVATE SECURITY INDUSTRY IN INDIA
B. MARKET TRENDS
C. PROCESS TO START A PRIVATE
SECURITY AGENCY IN INDIA
D. PSARA LICENSE
E. MODE OF BUSINESS
F. INDUSTRY PREDICTIONS
PRIVATE SECURITY INDUSTRY IN INDIA
The Private Security Services sector in India has seen a tremendous growth owing to an increase in
demand for security guards in private as well as public areas.

The Private Security Agency (PSA) industry has seen a spike in the number of security services
businesses in the past few years due to an increase in number of offices, IT parks, metro stations,
malls, hotels, airports, public events and gatherings.

The PSA sector in India is a mixture of home-based private players as well as international
companies due to the high growth rate and profit margins in the sector. Nonetheless, with an
increase in number of crimes and terrorism, and demand for private security, starting a Private
Security Agency remains a profitable business option.
FACTORS THAT LED TO THE
RISE OF PSA SECTOR IN INDIA
• Rise in Urbanisation and direct increase in demand in X and Y
cities.
• Increasing level of crimes and terrorism.
• Low police to people ratio in India.
• Rise in number of bank branches, ATMs, Malls, Shopping
Complexes, offices, etc.
• Rise in number of housing complexes and gated communities.
As per the Private Security Agencies Regulation Act, 2005 'Private
security' means security provided by a person, other than a public servant,
to protect or guard people or property or both and includes provision of
armoured car service.

‘Private Security Agency' means a person or body of persons, other than

a Government agency, department or organisation engaged in the business
of providing private security services including training to private security
guards or their supervisor or providing security guards to any industrial or
business undertaking or a company or any other person or property.

‘Private security guard’ means a person providing private security with

or without arms to another person or property or both and includes a
supervisor,
 S.W.O.T. ANALYSIS OF PSA SECTOR

STRENGTHS WEAKNESSES OPPORTUNITIES THREATS

• Low maintenance • High competition • Increasing number • High attrition
cost rate of commercial and rate
• High profit • Lack of trained residential • Security threats
margins personnel property • Highly
• Strong regional • High compliance • High Demand due unorganised
demand requirements to high crime rate sector
 9 Million
MARKET TRENDS Approximate workforce in
the Private Security Industry

INR 400 Billion

Estimate value of the
Private Security Industry
in India
 PSA Guards Employment In Different
Sectors in India
20%
41%

39%

Commercial Sector Residential Sector Miscellaneous

GEOGRAPHY-WISE DISTRIBUTION OF
HUMAN RESOURCES IN PSA SECTOR
30%

30%
25%
22%
25%

18%
20%

15%

10%
5%
5%

0%
LAWS APPLICABLE ON A PRIVATE
SECURITY AGENCY
1) The Private Security Agencies Regulation Act, 2005
2) The Payment of Wages Act, 1936
3) The Industrial Disputes Act, 1947
4) The Minimum Wages Act, 1948
5) The Employees' Provident Funds and Miscellaneous Provisions Act, 1952
6) The Payment of Bonus Act, 1965
7) The Contract Labour (Regulation and Abolition) Act, 1970
8) The Payment of Gratuity Act, 1972
9) The Equal Remuneration Act, 1976
10)The Inter-State Migrant Workmen (Regulation of Employment and Conditions of
Service) Act, 1979
PROCESS TO START A PRIVATE SECURITY
AGENCY IN INDIA
 Decide the Obtain Licenses Set Up Office
Business Type and And Connect
And Capital Registrations With Clients
 KINDS OF PRIVATE
SECURITY SERVICES

SECURITY
EVENT
MANNED CASH GUARD
SECURITY
GUARDING MANAGEMENT TRAINING
MANAGEMENT
INSTITUTION
CAPITAL
REQUIREMENT

Starting a Private Security Agency (PSA)

requires basic capital infusion to obtain an
office space and pay salary to workforce. Other
expenses would include:
 Obtaining the business licenses and
permits.
 Uniforms for Workforce
 Training of Guards.
BUSINESS REGISTRATION
A PSA must be given a legal identity by incorporating
it as a Private Limited Company, LLP, One Person
Company, Sole Proprietorship or Partnership Firm.

TRADEMARK
It is important to register the Logo of the business by BASIC
obtaining Trademark Registration for it under the
appropriate Trademark Classes. REGISTRATIONS
GST REGISTRATION
The business must be registered under the Goods and
Services Tax Act and have a valid GSTIN to function as
a PSA in India.
 ADDITIONAL REGISTRATIONS
ESI/PF REGISTRATION
If you are employing more than
20 people in the company, you
need to have ESI registration.
The PSA must ensure that
timely ESI/PF benefits are
provided to the hired guards.
S&E REGISTRATION
The Shop and Establishment
Act of the state in which the
business would be operated
would be applicable on the
business and the PSA must
obtain the State Shop and
Establishment Registration
accordingly.
ARMS LICENSE
In order to arm the guards,
the PSA would require to
obtain an Arms License. An
Arms License is obtained from
the state Authority in which
the PSA would operate.
 PSARA LICENSE
In order to operate as a Private Security Agency in any state in India, it
is mandatory to obtain the Private Security Agency license, also known
as the PSARA license.

The laws applicable on PSAs are laid down under the Security Agencies
Regulation Act (PSARA), 2005. Any application to obtain a PSARA
license must be filed with the PSARA Controlling Authority along with
the applicable fees and requisite documents.

There are 3 kinds of PSARA Permits:

• PSARA License to operate in 1 district.
• PSARA License to operate in 2-5 districts.
• PSARA License to operate in the entire State.
ELIGIBILITY TO OBTAIN PSARA LICENSE

No person or company should be convicted in an offence of fraud.

No person or company should be declared legally insolvent.
No person or company should be convicted of any crime with a
punishment of more than 2 years of imprisonment.
No person or company should be associated with any illegal or banned
organisation.
No person or company should be disqualified by the government due to
their involvement in any activity of misconduct.
 Certificate of Incorporation
DOCUMENTS
 Details of Arms License REQUIRED
 MOA & AOA of Company/LLP Agreement/ Partnership Deed
 Affidavit as per the PSARA Act
TO OBTAIN
 Ownership Proof for a place of business PSARA
 Identity Proof of all employees
LICENSE
 ID Proof of Directors/Partners/Proprietor
 Address Proof of Directors/Partners/Proprietor
 Character certification of all employees
 Registered Logo of the PSA.
 FEES PAYABLE

PSA in Entire State- INR

PSA in 1 District- PSA in 5 Districts- INR 25000
INR 5000 10000
(Karnataka- INR 50000)
 ELIGIBILITY TO
BECOME A GUARD
The person must be a citizen of India
The person must be more than 18 years of age and below 65
years of age.
The person must not have any objectionable character and
antecedents
The person must have passed the security training successfully
The person must fulfil all physical standards.
The person must not be convicted by a court
The person must not be dismissed for misconduct from any
Government institution
The validity of a PSARA License is 5 years from the date of
PSARA registration. However, in the states of Chhattisgarh
and Uttarakhand, a PSARA license is valid for 1 year.

The process of renewal of PSARA License involves filing a

renewal application within 90 days before the date of
expiry of the license.
 GROUNDS OF CANCELLATION OF PSARA LICENSE
1) When the license was obtained on misrepresentation or suppression of material facts.
2) When the license holder used false documents or photographs.
3) When the license holder violated the PSARA Act or relating.
4) When the license holder misused information obtained by him during the discharge of his duties as the PSA.
5) When the license holder has misrepresented that the PSA is an instrumentality of the Government or such agency is
or has been using a name different from that for which license has been granted;
6) When the license holder has been impersonating or permitting or aiding or abetting any body to impersonate as a
public servant.
7) When the private security agency had failed to commence its activities or engage a supervisor within the specified
time period.
8) When the license holder is or has willfully failed or refused to render the services agreed to any person.
9) When the license holder has done any act which is in violation of a court order or an order of a lawful authority.
10)When the license holder has violated any other laws applicable on it.
11) When there have been repeated instances in which the private security guard or guards provided by the PSA:
a) failed to provide private security or were guilty of gross negligence in not providing such security.
b) committed a breach of trust or misappropriated the property or a part thereof which they were supposed to
protect;
c) were found habitually drunk or indiscipline.
d) were found to be involved in committing crimes.
e) had connived or abetted a crime against the person or property placed under their charge.
12)When the license holder has done any act which poses a threat to national security, or did not provide assistance to
the police or other authority in the discharge of duty.
 COMPLIANCE
COMPLIANCE
RELATED TO
RELATED TO
WORKING
WAGES
HOURS

Minimum Working
Wages Hours

Overtime Annual and

compensation Sick Leaves

PF, Bonus, Period of

Gratuity Training

Insurance
MODE OF BUSINESS
For a Private Security Agency, the most
suitable form of business is a physical office
where the agency can be run, guards can be
trained and the clients can be connected from.

However, in the current digital era, a PSA can

be run as a Hybrid business model as well,
with an online presence to connect with
potential clients in the state digitally and a
physical office where the guards are trained
and other business operations are run.
HIRING GUARDS
Only those individuals can be
hired as guards who fulfil the
eligibility criteria set under the
PSARA Act. Guards can be hired
as permanent employees, for
which an Employment Agreement
must be put in place. Also, guards
can be hired on a contractual
basis, for which a Service
Agreement can be put in Place.
CONNECTING WITH
CLIENTS
Connecting with clients would
require marketing the business
on different digital and physical
platforms.
Marketing can be done online
through Email and SMS
Marketing/Paid Ads, etc.
Marketing can be done offline
through contacting offices, malls,
IT parks, newly established
housing complexes, etc.
 INDUSTRY PREDICTIONS

Growth HR Growth 52% Share of

Projection at a Trends- 11.83 Organised
20% CAGR Million by 2022 Sector by 2022
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 Government Registrations such as FSSAI License and
Registration, Trade License, PSARA License, S&E
Registration, IEC Registration, and much more.
 Trademark Registration under the right Trademark classes.
 Tax Registration such as GST Registration, Professional
Tax/TDS/Income Tax filing.
 Annual ROC Compliance Return Filings.
THE END