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The Future of the Indian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023

The Future of the Indian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023

Summary

Indian defense budget between 2014 and 2018, inclusive of military pensions, increased at a CAGR of 8.07%, and is expected to continue maintaining robust growth at a CAGR of 8.94% during the forecast period to reach a value of US$95.1 billion by 2023. Prolonged unresolved border issues and rising tension with two neighboring nations, China and Pakistan, is expected to fuel the defense budget in the coming years; in addition to the country’s need to replace its aging and outdated military hardware and technology.

Defense capital expenditure is expected to increase at a CAGR of 8.07% as India is expected to procure and invest more in segments such as multirole aircraft, corvettes, submarines, tanks, artillery guns, Multi Barrel Rocket Launchers (MBRL), helicopters, submarines, surface-to-air missiles, Unmanned Aerial Vehicles (UAV) and frigates, among others, during the forecast period. In addition, expenditure on IT and communications is expected to increase significantly, with a strong focus on enterprise applications, systems integration, and real-time mobile communications.

Furthermore, one of the key factors driving the Indian defense budget during the forecast period will be the implementation of OROP (One Rank, One Pension) and the 7th Central Pay commission, which is expected to further inflate the military’s revenue expenditure.

The Indian Ministry of Finance (MoF) has significantly increased its expenditure on homeland security to counter a series of terrorist attacks and prevent the smuggling of arms and explosives, as well as domestic uprisings. Over 2014-2018, the country invested a total of US$56.3 billion in homeland security, which is expected to increase to US$88.6 billion over the forecast period. Due to the nature of the security threats that the country faces, the main opportunities for growth in homeland security are expected in the border security, police force modernization, aviation, mass transportation, and maritime security markets.

India was the world’s top importer of military hardware over 2012-2016. The country’s defense equipment imports, which accounted for 13% of global arms imports over 2012-2016, were three times larger than its closest rivals, China and Pakistan. The country relies on imports to meet 60% of its defense requirements, with the remaining 40% being met by domestic companies.

The report ""The Future of the Indian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023"" offers detailed analysis of Indian defense industry with market size forecasts covering the next five years.

In particular, it provides an in-depth analysis of the following -

- Indian defense industry market size and drivers
- Budget allocation and key challenges
- Porter’s Five Force analysis of Indian defense industry
- Import and Export Dynamics
- Market opportunities
- Competitive landscape and strategic insights

Companies mentioned in this report: Lockheed Martin Corporation, BAE Systems Plc. , Thales, Boeing , Mazagon Docks Limited, Hindustan Aeronautics Limited (HAL) , Bharat Electronics Limited (BEL) , Bharat Dynamics Limited (BDL), Ordnance Factory Board, Bharat Earth Movers Limited (BEML) and Goa Shipyard Limited (GSL), Tata Advanced Systems Limited (TASL) and Mahindra Defense Systems (MDS)

Scope

- India has a coastline, land frontier, island territories, airspace, and crucial offshore installations to defend against the various potential security threats. As a result, it is highly necessary for the Indian Armed Forces to be prepared to repel any external threat. The Indian Government is therefore continuously focusing on improving the country’s existing defense infrastructure. Only 40% of the defense needs are currently fulfilled by the domestic defense industry and the rest is imported from various countries of the world.
- The Indian Government has identified the need to build a strong and self-sustaining defense sector as a top priority. This has prompted the Indian MoD to consistently allocate an increasing share of its budget toward the defense sector, a trend that is expected to continue over the forecast period. Historic data shows that India invested US$197.7 billion in the defense sector during 2014-2018, and this is expected to increase to US$287.5 billion over 2019-2023.
- Historic data shows the average capital expenditure allocation of the total Indian defense budget was averaging 33.2%, and the allocation is expected to decline marginally during the forecast period to an average of 30.6%.
- The Indian MoD is expected to invest in submarines, multi-role aircrafts, corvettes, tanks, artillery guns, Multi Barrel Rocket Launchers (MBRL), helicopters, submarines, surface-to-air missiles, Unmanned Aerial Vehicles (UAV) and frigates among others.

Reasons to buy

- This report will give the user confidence to make the correct business decisions based on a detailed analysis of Indian defense industry market trends for the coming five years
- The market opportunity section will inform the user about the various military requirements that are expected to generate revenues during the forecast period. The description includes technical specifications, recent orders, and the expected investment pattern by the country during the forecast period
- Detailed profiles of the top domestic and foreign defense manufacturers with information about their products, alliances, recent contract wins, and financial analysis wherever available. This will provide the user with a total competitive landscape of the sector
- A deep qualitative analysis of Indian defense industry covering sections including demand drivers, Porter’s Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts


1. Introduction
1.1. What is this Report About?
1.2. Definitions
1.3. Summary Methodology
1.4. About Strategic Defence Intelligence
2. Executive Summary
3. Market Attractiveness and Emerging Opportunities
3.1. Current Market Scenario
3.1.1. Primary Threat Perception
3.1.2. Military Doctrine and Strategy
3.1.3. Military Fleet Size
3.1.4. Procurement Programs
Ongoing Procurement Programs
Future Procurement Programs
Top Procurement Programs by Value (US$ Million) 2018-2023
3.1.5. Social, Political and Economic Environment and Support for Defense Projects
3.1.6. Political and Strategic Alliances
3.2. Defense Market Size Historical and Forecast
3.2.1. Indian defense expenditure, inclusive of pensions, expected to be US$401.7 billion cumulatively over 2019-2023
3.2.2. Indian defense expenditure, excluding pensions, expected to be US$287.5 billion cumulatively over 2019-2023
3.2.3. Modernization initiatives, hostile neighbors, territorial disputes, and the implementation of OROP and the 7th Pay Commission will be the key growth drivers
3.2.4. Defense budget as a percentage of GDP will remain at an average of 1.5% over the forecast period
3.3. Analysis of Defense Budget Allocation
3.3.1. Revenue expenditure expected to increase over the forecast period
3.3.2. Procurement of equipment is expected to pick up over the forecast period
3.3.3. Army continues to see the largest share of the defense budget
3.3.4. Defense expenditure allocation for the army expected to increase over the forecast period
3.3.5. Per capita defense expenditure is expected to increase over the forecast period
3.4. Homeland Security Market Size and Forecast
3.4.1. India is projected to spend US$88.6 billion cumulatively on homeland security over the forecast period
3.4.2. Homeland security is expected to be driven by cross-border terrorism and domestic conflicts
3.4.3. India falls under the “highly affected” terrorism category
3.4.4. India faces a high level of threat from foreign terrorist organizations
3.4.5. India has a terrorism index score of 7.5
3.5. Benchmarking with Key Global Markets
3.5.1. India’s defense budget expected to grow at a CAGR of 8.09%
3.5.2. The US and China dominate the global defense industry
3.5.3. India allocates a lower share of its GDP to defense than other Asian countries
3.6. Market Opportunities: Key Trends and Growth Stimulators
3.6.1. Top Defense Market Sectors by Value (US$ Million) - Projections over 2018-2023
3.6.2. Land-Based C4ISR
3.6.3. Critical Infrastructure Protection (CIP) - Physical Security
3.6.4. Multirole Aircraft
4. Defense Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. Indian defense imports slowly declining
4.1.2. Russia dominates Indian arms imports
4.1.3. Aircraft accounted for the majority of defense imports during 2013-2017
4.2. Export Market Dynamics
4.2.1. India’s low profile in defense exports is set to change over the forecast period
4.2.2. Underdeveloped nations across Asia and Africa are the main importers of Indian defense goods
4.2.3. Naval vessels accounted for the majority of defense imports during 2013-2017
5. Industry Dynamics
5.1. Five Forces Analysis
5.1.1. Bargaining Power of Supplier: Low to Medium
5.1.2. Bargaining Power of Buyer: High
5.1.3. Barrier to Entry: Low to Medium
5.1.4. Intensity of Rivalry: High
5.1.5. Threat of Substitution: Medium to High
6. Market Entry Strategy
6.1. Market Regulation
6.1.1. Defense Procurement Procedure (DPP) - 2016:
6.1.2. Offset policy to drive defense industrial modernization
6.1.3. Main features of revised Defense Procurement Procedure (DPP) - 2016
6.1.4. Private sectors permitted to produce arms and ammunition under the new Draft Arms and Ammunitions Manufacturing Policy (DAAM)
6.1.5. Foreign direct investment (FDI) increased to 49% in the Indian defense sector
6.2. Market Entry Route
6.2.1. Budgeting Process
6.2.2. Procurement Policy and Process
6.2.3. Foreign OEMs are forming joint ventures in order to enter the market
6.2.4. India emerges as a key outsourcing hub for global defense companies
6.3. Key Challenges
6.3.1. Offset policy is biased towards the domestic public and private sectors
6.3.2. Insufficient information and transparency regarding future plans
6.3.3. Bureaucracy, corruption, and long project delays
6.3.4. Developing advanced, low-cost solutions is essential to gain market share
7. Competitive Landscape and Strategic Insights
7.1. Competitive Landscape Overview
7.1.1. Domestic public companies have a strong presence in the Indian defense industry
7.2. Key Foreign Companies
7.2.1. Lockheed Martin Corporation: Overview
7.2.2. Lockheed Martin Corporation: Products
7.2.3. Lockheed Martin Corporation: Recent Announcements and Strategic Initiatives
7.2.4. Lockheed Martin Corporation: Alliances
7.2.5. Lockheed Martin Corporation: Recent Contract Wins
7.2.6. BAE Systems Plc.: Overview
7.2.7. BAE Systems Plc.: Products
7.2.8. BAE Systems Plc.: Recent Announcements and Strategic Initiatives
7.2.9. BAE Systems Plc.: Alliances
7.2.10. BAE Systems Plc.: Recent Contract Wins
7.2.11. Thales: Overview
7.2.12. Thales: Products
7.2.13. Thales: Recent Announcements and Strategic Initiatives
7.2.14. Thales: Alliances
7.2.15. Thales: Recent Contract Wins
7.2.16. Boeing: Overview
7.2.17. Boeing: Products
7.2.18. Boeing: Recent Announcements and Strategic Initiatives
7.2.19. Boeing: Alliances
7.2.20. Boeing: Recent Contract Wins
7.3. Key Public Sector Companies
7.3.1. Mazagon Docks Limited: Overview
7.3.2. Mazagon Docks Limited: Products
7.3.3. Mazagon Docks Limited: Recent Announcements and Strategic Initiatives
7.3.4. Mazagon Docks Limited: Alliances
7.3.5. Mazagon Docks Limited: Recent Contract Wins
7.3.6. Hindustan Aeronautics Limited: Overview
7.3.7. Hindustan Aeronautics Limited: Products and Services
7.3.8. Hindustan Aeronautics Limited: Recent Announcements and Strategic Initiatives
7.3.9. Hindustan Aeronautics Limited: Alliances
7.3.10. Hindustan Aeronautics Limited: Recent Contract Wins
7.3.11. Bharat Electronics Limited: Overview
7.3.12. Bharat Electronics Limited: Products and Services
7.3.13. Bharat Electronics Limited: Recent Announcements and Strategic Initiatives
7.3.14. Bharat Electronics Limited: Alliances
7.3.15. Bharat Electronics Limited: Recent Contract Wins
7.3.16. Bharat Electronics Limited - Financial Analysis
7.3.17. Bharat Dynamics Limited: Overview
7.3.18. Bharat Dynamics Limited: Products
7.3.19. Bharat Dynamics Limited: Recent Announcements and Strategic Initiatives
7.3.20. Bharat Dynamics Limited: Alliances
7.3.21. Bharat Dynamics Limited: Recent Contract Wins
7.3.22. Ordnance Factory Board: Overview
7.3.23. Ordinance Factory Board: Products
7.3.24. Ordinance Factory Board: Recent Announcements and Strategic Initiatives
7.3.25. Ordinance Factory Board: Alliances
7.3.26. Ordinance Factory Board: Recent Contract Wins
7.3.27. BEML: Overview
7.3.28. BEML: Products
7.3.29. BEML: Recent Announcements and Strategic Initiatives
7.3.30. BEML: Alliances
7.3.31. Goa Shipyard Limited: Overview
7.3.32. Goa Shipyard Limited: Products and Services
7.3.33. Goa Shipyard Limited: Recent Announcements and Strategic Initiatives
7.3.34. Goa Shipyard Limited: Alliances
7.3.35. Goa Shipyard Limited: Recent Contract Wins
7.4. Key Private Sector Companies
7.4.1. Tata Advanced Systems Limited: Overview
7.4.2. Tata Advanced Systems Limited: Products
7.4.3. Tata Advanced Systems Limited: Recent Announcements and Strategic Initiatives
7.4.4. Tata Advanced Systems Limited: Alliances
7.4.5. Tata Advanced Systems Limited: Recent Contract Wins
7.4.6. Mahindra Defence Systems: Overview
7.4.7. Mahindra Defence Systems: Products
7.4.8. Mahindra Defence Systems: Recent Announcements and Strategic Initiatives
7.4.9. Mahindra Defence Systems: Alliances
8. Business Environment and Country Risk
8.1. Economic Performance
8.1.1. GDP Per Capita, US$
8.1.2. GDP (Current US$ Billion)
8.1.3. Exports of Goods and Services (Current LCU Billion)
8.1.4. Imports of Goods and Services (Current LCU Billion)
8.1.5. Gross National Disposable Income (US$ Billion)
8.1.6. LCU per US$ (Period Average)
8.1.7. Market Capitalization of Listed Companies (US$ Billion)
8.1.8. Market Capitalization of Listed Companies (% of GDP)
8.1.9. Total Government Cash Surplus/Deficit as a Percentage of GDP (LCU)
8.1.10. Goods Exports as a Percentage of GDP
8.1.11. Goods Imports as a Percentage of GDP
8.1.12. Services Imports as a Percentage of GDP
8.1.13. Services Exports as a Percentage of GDP
8.1.14. Foreign Direct Investment, net (BoP, Current US$ Billion)
8.1.15. Net Foreign Direct Investment as a Percentage of GDP
8.1.16. Mining, Manufacturing, and Utilities Output (LCU Billion)
9. Appendix
9.1. About SDI
9.2. Disclaimer
List of Tables
Table 1: The Indian Army Strength
Table 2: Indian Navy Strength
Table 3: Indian Air Force Strength
Table 4: India - Ongoing Procurement Programs
Table 5: India - Future Procurement Programs
Table 6: Top Indian Defense Procurement Programs by Value (US$ Million) 2018-2023
Table 7: Indian Defense Expenditure Including Pensions (INR Billion & US$ Billion), 2014-2023
Table 8: Indian Defense Expenditure Excluding Pensions (INR Billion & US$ Billion), 2014-2023
Table 9: Indian GDP Growth vs. Defense Expenditure as Percentage of GDP Growth, 2014-2023
Table 10: Indian Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023
Table 11: Indian Capital Expenditure (INR Billion & US$ Billion), 2014-2023
Table 12: Indian Defense Budget Split (%), 2014-2023
Table 13: Indian Defense Budget in INR Billion - Breakdown by Services (Army, Navy, Air Force and Others) 2014-2023
Table 14: Indian Defense Budget in US$ Billion - Breakdown by Services (Army, Navy, Air Force and Others) 2014-2023
Table 15: Indian Per Capita Defense Expenditure (US$), 2014-2023
Table 16: Indian Homeland Security Budget (INR Billion & US$ Billion), 2014-2023
Table 17: Terrorism Index, 2018
Table 18: Benchmarking with Key Markets - 2014-2018 vs. 2019-2023
Table 19: Top Indian Defense Market Sectors by Value (US$ Million) - 2018-2023
Table 20: Offset Policy in India
Table 21: Indian Budget Formation Timetable:
Table 22: Market Entry Strategies and Key Objectives of Foreign Companies in the Indian Defense Sector
Table 23: Key Players and their Operations in the Indian Defense Industry
Table 24: Top Defense Suppliers in The Indian Defense Industry - By Value (US$ Million) 2018-2023
Table 25: Scale of Operations of Domestic Public &Private Sector Companies in the Indian Defense Industry
Table 26: Lockheed Martin Corporation - Products
Table 27: Lockheed Martin Corporation - Alliances
Table 28: Lockheed Martin Corporation - Recent Contract Wins
Table 29: BAE Systems Plc. - Products
Table 30: BAE Systems Plc. - Alliances
Table 31: BAE Systems Plc. - Recent Contract Wins
Table 32: Thales - Products
Table 33: Thales - Alliances
Table 34: Thales - Recent Contract Wins
Table 35: Boeing - Products
Table 36: Boeing - Alliances
Table 37: Boeing - Recent Contract Wins
Table 38: Mazagon Docks Limited - Products
Table 39: Mazagon Docks Limited - Alliances
Table 40: Mazagon Docks Limited - Recent Contract Wins
Table 41: Hindustan Aeronautics Limited - Products and Services
Table 42: Hindustan Aeronautics Limited - Alliances
Table 43: Hindustan Aeronautics Limited - Recent Contract Wins
Table 44: Bharat Electronics Limited - Products and Services
Table 45: Bharat Electronics Limited - Alliances
Table 46: Bharat Electronics Limited - Recent Contract Wins
Table 47: Bharat Dynamics Limited - Products
Table 48: Bharat Dynamics Limited - Alliances
Table 49: Bharat Dynamics Limited - Recent Contract Wins
Table 50: Ordinance Factory Board - Products
Table 51: Ordinance Factory Board - Alliances
Table 52: Ordinance Factory Board - Recent Contract Wins
Table 53: BEML - Products
Table 54: BEML - Alliances
Table 55: Goa Shipyard Limited - Products and Services
Table 56: Goa Shipyard Limited - Alliances
Table 57: Goa Shipyard Limited - Recent Contract Wins
Table 58: Tata Advanced Systems Limited - Products
Table 59: Tata Advanced Systems Limited - Alliances
Table 60: Tata Advanced Systems Limited - Recent Contract Wins
Table 61: Mahindra Defence Systems - Products
Table 62: Mahindra Defence Systems - Alliances
List of Figures
Figure 1: Indian Defense Expenditure Including Pensions (INR Billion), 2014-2022
Figure 2: Indian Defense Expenditure Including Pensions (US$ Billion), 2014-2022
Figure 3: Indian Defense Expenditure Excluding Pensions (INR Billion), 2014-2023
Figure 4: Indian Defense Expenditure Excluding Pensions (US$ Billion), 2014-2023
Figure 5: Indian GDP Growth vs. Defense Expenditure as Percentage of GDP Growth, 2014-2023
Figure 6: Indian Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023
Figure 7: Indian Capital Expenditure (INR Billion), 2014-2023
Figure 8: Indian Capital Expenditure (US$ Billion), 2014-2023
Figure 9: Indian Defense Budget Split (%), 2014-2023
Figure 10: Indian Defense Expenditure Allocation By Military Services - Split by Army, Navy, Air Force and Others (INR Billion), 2014-2023
Figure 11: Indian Defense Expenditure Allocation By Military Services - Split by Army, Navy, Air Force and Others (US$ Billion), 2014-2023
Figure 12: Indian Per Capita Defense Expenditure (US$), 2014-2023
Figure 13: Indian Homeland Security Budget (INR Billion), 2014-2023
Figure 14: Indian Homeland Security Budget (US$ Billion), 2014-2023
Figure 15: Terrorism Heat Map, 2018
Figure 16: Terrorism Index
Figure 17: Benchmarking with Key Markets - 2014-2018 vs. 2019-2023
Figure 18: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2018 and 2023
Figure 19: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2018
Figure 20: Land Based C4ISR Market Size (US$ Million), 2018-2023
Figure 21: Critical Infrastructure Protection (CIP) - Physical Security Market Size (US$ Million), 2018-2023
Figure 22: Multirole Aircraft Market Size (US$ Million), 2018-2023
Figure 23: Top Indian Defense Procurements in Terms of Their Supplier Relationships
Figure 24: Indian Defense Import Trend (US$ Million), 2013-2017 (TIV Values*)
Figure 25: Country-wise Break-up of Indian Defense Imports (%), 2013-2017 (TIV Values)
Figure 26: Weapon Category Break-up of Indian Defense Imports (%), 2013-2017 (TIV Values)
Figure 27: Indian Defense Export Trend (US$ Million), 2013-2017 (TIV Values)
Figure 28: Country-wise Break-up of Indian Defense Exports (%), 2013-2017 (TIV Values)
Figure 29: Weapon Category Break-up of Indian Defense Exports (%), 2013-2017 (TIV Values)
Figure 30: Industry Dynamics - Porter’s Five Forces Analysis
Figure 31: Bharat Electronics Limited - Revenue Trend Analysis (INR Billion), 2013-2017
Figure 32: Bharat Electronics Limited - Operating Profit Trend Analysis (INR Billion), 2013-2017
Figure 33: Bharat Electronics Limited - Net Profit Trend Analysis (INR Billion), 2013-2017
Figure 34: GDP Per Capita in US$, 2015-2025
Figure 35: GDP (Current US$ Billion), 2015-2025
Figure 36: Exports of Goods and Services (Current LCU Billion), 2005-2014
Figure 37: Imports of Goods and Services (Current LCU Billion), 2005-2014
Figure 38: Gross National Disposable Income (US$ Billion), 2005-2012
Figure 39: LCU per US$ (Period Average), 2015-2024
Figure 40: Market Capitalization of Listed Companies (US$ Billion), 2005-2012
Figure 41: Market Capitalization of Listed Companies (% of GDP), 2005-2012
Figure 42: Total Government Cash Surplus/Deficit as a Percentage of GDP (LCU), 2005-2012
Figure 43: Goods Exports as a Percentage of GDP, 2005-2014
Figure 44: Goods Imports as a Percentage of GDP, 2005-2014
Figure 45: Service Imports as a Percentage of GDP, 2005-2014
Figure 46: Services Exports as a Percentage of GDP, 2005-2014
Figure 47: Foreign Direct Investment, net (BoP, Current US$ Billion), 2005-2014
Figure 48: Net Foreign Direct Investment as a Percentage of GDP, 2005-2014
Figure 49: Mining, Manufacturing, Utilities Output (LCU Billion), 2005-2014

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