Future of the India Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022

Future of the India Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022

Summary

The Future of Indian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022, published by Strategic Defence Intelligence, provides readers with detailed analysis of both historic and forecast defense industry values, factors influencing demand, the challenges faced by industry participants, analysis of industry leading companies, and key news.

Synopsis

This report offers detailed analysis of Indian defense industry with market size forecasts covering the next five years. This report will also analyze factors that influence demand for the industry, key market trends, and challenges faced by industry participants.

In particular, it provides an in-depth analysis of the following -
- Indian defense industry market size and drivers: detailed analysis of Indian defense industry during 2018-2022, including highlights of the demand drivers and growth stimulators for the industry. It also provides a snapshot of the countrys expenditure and modernization patterns
- Budget allocation and key challenges: insights into procurement schedules formulated within the country and a breakdown of the defense budget. It also details the key challenges faced by defense market participants within the country
- Porters Five Force analysis of Indian defense industry: analysis of the market characteristics by determining the bargaining power of suppliers, bargaining power of buyers, threat of substitution, intensity of rivalry, and barriers to entry
- Import and Export Dynamics: analysis of prevalent trends in the countrys imports and exports over the last five years
- Market opportunities: details of the top five defense investment opportunities over the next 10 years
- Competitive landscape and strategic insights: analysis of the competitive landscape of Indiann defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis

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 countrys existing defense infrastructure. Only 30% 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$187.8 billion in the defense sector during 2013-2017, and this is expected to increase to US$285.2 billion over 2018-2022.
- Historic data shows the average capital expenditure allocation of the total Indian defense budget was averaging 35.8%, and the allocation is expected to decline marginally during the forecast period to an average of 35.3%.
- 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, Porters Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts

1. Introduction 10
1.1. What is this Report About? 10
1.2. Definitions 10
1.3. Summary Methodology 12
1.4. About Strategic Defence Intelligence 13
2. Executive Summary 14
3. Market Attractiveness and Emerging Opportunities 16
3.1. Current Market Scenario 17
3.1.1. Primary threat perception 17
3.1.2. Military Doctrine & Strategy 19
3.1.3. Military Fleet Size 23
3.1.4. Procurement Programs 28
Ongoing procurement programs 28
Future procurement programs 31
3.1.5. Social, Political and Economic Environment & Support for Defense Projects 34
3.1.6. Political & Strategic Alliances 35
3.2. Defense Market Size Historical and Forecast 37
3.2.1. Indian defense budget expected to be US$285.2 billion cumulatively over 2018-2022 37
3.2.2. Modernization initiatives, hostile neighbors, territorial disputes, and implementation of OROP and 7th Pay Commission will be the key growth drivers 39
3.2.3. Defense budget as a percentage of GDP will remain at an average of 1.6% over the forecast period 41
3.3. Analysis of Defense Budget Allocation 42
3.3.1. Revenue expenditure expected to increase over the forecast period 42
3.3.2. Procurement of equipment is expected to pick up over the forecast period 44
3.3.3. Army continues to see the largest share of the defense budget 46
3.3.4. Defense ministry will spend US$152.6 billion on its army over the forecast period 47
3.3.5. Indian MoD projected to spend US$68.2 billion on its air force over the forecast period 49
3.3.6. Expenditure for the navy expected to grow at a CAGR of 9.85% during 2018-2022 51
3.3.7. Per capita defense expenditure is expected to increase over the forecast period 53
3.4. Homeland Security Market Size and Forecast 54
3.4.1. India is projected to spend US$74.8 billion cumulatively on homeland security over the forecast period 54
3.4.2. Homeland security is expected to be driven by cross-border terrorism and domestic conflicts 57
3.4.3. India falls under highly affected of terrorism category 59
3.4.4. India faces high level of threat from foreign terrorist organizations 60
3.4.5. India has terrorism index score of 7.5 62
3.5. Benchmarking with Key Global Markets 63
3.5.1. Indias defense budget expected to grow at a CAGR of 10.49% 63
3.5.2. The US and China dominate the global defense industry 65
3.5.3. India allocates a lower share of its GDP to defense than other Asian countries 66
3.6. Market Opportunities: Key Trends and Growth Stimulators 67
3.6.1. Multi-role Aircraft 67
3.6.2. Missile Defense System 69
3.6.3. Infrastructure Construction 70
4. Defense Procurement Market Dynamics 72
4.1. Import Market Dynamics 73
4.1.1. Indian defense imports slowly declining 73
4.1.2. Russia dominates Indian arms imports 74
4.1.3. Aircraft accounted for the majority of defense imports during 2012-2016 75
4.2. Export Market Dynamics 76
4.2.1. Indias low profile in defense exports is set to change over the forecast period 76
4.2.2. Underdeveloped nations across Asia and Africa are the main importers of Indian defense goods 77
4.2.3. Naval Vessels accounted for the majority of defense imports during 2012-2016 78
Industry Dynamics 79
4.3. Five Forces Analysis 79
4.3.1. Bargaining power of supplier: low to high 80
4.3.2. Bargaining power of buyer: high 81
4.3.3. Barrier to entry: medium to high 81
4.3.4. Intensity of rivalry: high 81
4.3.5. Threat of substitution: medium to high 82
5. Market Entry Strategy 83
5.1. Market Regulation 83
5.1.1. Defense Procurement Procedure (DPP) - 2016: A significant improvement 83
5.1.2. Offset policy to drive defense industrial modernization 83
5.1.3. Main features of revised Defense Procurement Procedure (DPP) - 2016 85
5.1.4. Private sectors permitted to produce arms and ammunition under the new Draft Arms and Ammunitions Manufacturing Policy (DAAM) 86
5.1.5. Foreign direct investment (FDI) increased to 49% in the Indian defense sector 86
5.2. Market Entry Route 88
5.2.1. Budgeting Process 88
5.2.2. Procurement Policy & Process 89
5.2.3. Foreign OEMs are forming joint ventures in order to enter the market 90
5.2.4. India emerges as a key outsourcing hub for global defense companies 92
5.3. Key Challenges 93
5.3.1. Offset policy is biased towards the domestic public and private sectors 93
5.3.2. Insufficient information and transparency on future plans 93
5.3.3. Bureaucracy, corruption, and long project delays 94
5.3.4. Developing advanced low-cost solutions is essential to gain market share 94
6. Competitive landscape and Strategic Insights 95
6.1. Competitive landscape Overview 95
6.1.1. Domestic public companies have a strong presence in the Indian defense industry 95
6.2. Key Foreign Companies 98
6.2.1. Lockheed Martin Corporation - overview 98
6.2.2. Lockheed Martin Corporation - main products 98
6.2.3. Lockheed Martin Corporation - recent announcements and strategic initiatives 99
6.2.4. Lockheed Martin Corporation - alliances 100
6.2.5. Lockheed Martin Corporation - recent contract wins 100
6.2.6. BAE Systems Plc. - overview 102
6.2.7. BAE Systems Plc. - main products 102
6.2.8. BAE Systems Plc. - recent announcements and strategic initiatives 103
6.2.9. BAE Systems Plc. - alliances 104
6.2.10. BAE Systems Plc. - recent contract wins 105
6.2.11. Thales - overview 106
6.2.12. Thales - main products 106
6.2.13. Thales - recent announcements and strategic initiatives 106
6.2.14. Thales - alliances 107
6.2.15. Thales - recent contract wins 108
6.2.16. Boeing - overview 109
6.2.17. Boeing - main products 109
6.2.18. Boeing - recent announcements and strategic initiatives 109
6.2.19. Boeing - alliances 110
6.2.20. Boeing - recent contract wins 110
6.3. Key Public Sector Companies 111
6.3.1. Mazagon Docks Limited - overview 111
6.3.2. Mazagon Docks Limited - main products 111
6.3.3. Mazagon Docks Limited - recent announcements and strategic initiatives 111
6.3.4. Mazagon Docks Limited - alliances 112
6.3.5. Mazagon Docks Limited - recent contract wins 112
6.3.6. Hindustan Aeronautics Limited - overview 113
6.3.7. Hindustan Aeronautics Limited - main products and services 113
6.3.8. Hindustan Aeronautics Limited - recent announcements and strategic initiatives 114
6.3.9. Hindustan Aeronautics Limited - alliances 115
6.3.10. Hindustan Aeronautics Limited - recent contract wins 116
6.3.11. Bharat Electronics Limited - overview 118
6.3.12. Bharat Electronics Limited - main products and services 118
6.3.13. Bharat Electronics Limited - recent announcements and strategic initiatives 119
6.3.14. Bharat Electronics Limited - alliances 120
6.3.15. Bharat Electronics Limited - recent contract wins 121
6.3.16. Bharat Electronics Limited - Financial analysis 122
6.3.17. Bharat Dynamics Limited - overview 124
6.3.18. Bharat Dynamics Limited - main products 124
6.3.19. Bharat Dynamics Limited - recent announcements and strategic initiatives 124
6.3.20. Bharat Dynamics Limited - alliances 125
6.3.21. Bharat Dynamics Limited - recent contract wins 125
6.3.22. Ordnance Factory Board - overview 126
6.3.23. Ordinance Factory Board - main products 126
6.3.24. Ordinance Factory Board - recent announcements and strategic initiatives 126
6.3.25. Ordinance Factory Board - alliances 127
6.3.26. Ordinance Factory Board - recent contract wins 127
6.3.27. BEML - overview 128
6.3.28. BEML - main products 128
6.3.29. BEML - recent announcements and strategic initiatives 129
6.3.30. BEML - alliances 130
6.3.31. Goa Shipyard Limited - overview 132
6.3.32. Goa Shipyard Limited - main products and services 132
6.3.33. Goa Shipyard Limited - recent announcements and strategic initiatives 133
6.3.34. Goa Shipyard Limited - alliances 133
6.3.35. Goa Shipyard Limited - recent contract wins 134
6.4. Key Private Sector Companies 135
6.4.1. Tata Advanced Systems Limited - overview 135
6.4.2. Tata Advanced Systems Limited - main products 135
6.4.3. Tata Advanced Systems Limited - recent announcements and strategic initiatives 135
6.4.4. Tata Advanced Systems Limited - alliances 136
6.4.5. Tata Advanced Systems Limited - recent contract wins 137
6.4.6. Mahindra Defence Systems - overview 138
6.4.7. Mahindra Defence Systems - main 138
6.4.8. Mahindra Defence Systems - recent announcements and strategic initiatives 138
6.4.9. Mahindra Defence Systems - alliances 139
7. Business Environment and Country Risk 141
7.1. Economic Performance 141
7.1.1. GDP Per Capita, US$ 141
7.1.2. GDP (current US$ Billion) 142
7.1.3. Exports of goods and services (current LCU Billion) 143
7.1.4. Imports of goods and services (current LCU Billion) 144
7.1.5. Gross National Disposable Income (US$ Billion) 145
7.1.6. LCU per USD (period average) 146
7.1.7. Market Capitalization of Listed Companies (US$ Billion) 147
7.1.8. Market Capitalization of Listed Companies (% of GDP) 148
7.1.9. Total Government cash surplus/deficit as % of GDP (LCU) 149
7.1.10. Goods exports as a percentage of GDP 150
7.1.11. Goods imports as a percentage of GDP 151
7.1.12. Services imports as a percentage of GDP 152
7.1.13. Services Exports as a percentage of GDP 153
7.1.14. Foreign direct investment, net (BoP, current US$ Bn) 154
7.1.15. Net foreign direct investment as % of GDP 155
7.1.16. Mining, Manufacturing, and Utilities Output (US$ Bn) 156
8. Appendix 157
8.1. About SDI 157
8.2. Disclaimer 157

List Of Tables

Table 1: The Indian Army Strength 23
Table 2: Indian Navy Strength 24
Table 3: Indian Air Force Strength 26
Table 4: India - Ongoing Procurement Programs 28
Table 5: India - Future Procurement Programs 31
Table 6: Indian Defense Expenditure (INR Billion & US$ Billion), 2013-2022 37
Table 7: Indian GDP Growth vs. Defense Expenditure as Percentage of GDP Growth, 2013-2022 41
Table 8: Indian Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022 42
Table 9: Indian Capital Expenditure (INR billion & US$ billion), 2013-2022 44
Table 10: Indian Defense Budget Split (%), 2013-2022 46
Table 11: Indian Army Expenditure (INR billion & US$ billion), 2013-2022 47
Table 12: Indian Air Force Expenditure (INR billion & US$ billion), 2013-2022 49
Table 13: Indian Navy Expenditure (INR billion & US$ billion), 2013-2022 51
Table 14: Indian Per Capita Defense Expenditure (US$), 2013-2022 53
Table 15: Indian Homeland Security Budget (INR billion & US$ billion), 2013-2022 55
Table 16: Terrorism Index, 2017 60
Table 17: Benchmarking with Key Markets - 2013-2017 vs. 2018-2022 63
Table 18: Offset Policy in India 84
Table 19: Indian Budget Formation Timetable: 88
Table 20: Market Entry Strategies and Key Objectives of Foreign Companies in the Indian Defense Sector 90
Table 21: Key Players and their Operations in the Indian Defense Industry 92
Table 22: Scale of Operations of Domestic Public &Private Sector Companies in the Indian Defense Industry 95
Table 23: Lockheed Martin Corporation - Main Products 98
Table 24: Lockheed Martin Corporation - Alliances 100
Table 25: Lockheed Martin Corporation - Recent Contract Wins 100
Table 26: BAE Systems Plc. - Main Products 102
Table 27: BAE Systems Plc. - Alliances 104
Table 28: BAE Systems Plc. - Recent Contract Wins 105
Table 29: Thales - Main Products 106
Table 30: Thales - Alliances 107
Table 31: Thales - Recent Contract Wins 108
Table 32: Boeing - Main Products 109
Table 33: Boeing - Alliances 110
Table 34: Boeing - Recent Contract Wins 110
Table 35: Mazagon Docks Limited - Main Products 111
Table 36: Mazagon Docks Limited - Alliances 112
Table 37: Mazagon Docks Limited - Recent Contract Wins 112
Table 38: Hindustan Aeronautics Limited - Main Products and Services 113
Table 39: Hindustan Aeronautics Limited - Alliances 115
Table 40: Hindustan Aeronautics Limited - Recent Contract Wins 116
Table 41: Bharat Electronics Limited - Major Products and Services 118
Table 42: Bharat Electronics Limited - Alliances 120
Table 43: Bharat Electronics Limited - Recent Contract Wins 121
Table 44: Bharat Dynamics Limited - Main Products 124
Table 45: Bharat Dynamics Limited - Alliances 125
Table 46: Bharat Dynamics Limited - Recent Contract Wins 125
Table 47: Ordinance Factory Board - Main Products 126
Table 48: Ordinance Factory Board - Alliances 127
Table 49: Ordinance Factory Board - Recent Contract Wins 127
Table 50: BEML - Main Products 128
Table 51: BEML - Alliances 130
Table 52: Goa Shipyard Limited - Main Products and Services 132
Table 53: Goa Shipyard Limited - Alliances 133
Table 54: Goa Shipyard Limited - Recent Contract Wins 134
Table 55: Tata Advanced Systems Limited - Main Products 135
Table 56: Tata Advanced Systems Limited - Alliances 136
Table 57: Tata Advanced Systems Limited - Recent Contract Wins 137
Table 58: Mahindra Defence Systems - Main Products 138
Table 59: Mahindra Defence Systems - Alliances 139

List Of Figures

Figure 1: Indian Defense Expenditure (INR Billion), 2013-2022 38
Figure 2: Indian Defense Expenditure (US$ Billion), 2013-2022 38
Figure 3: Indian GDP Growth vs. Defense Expenditure as Percentage of GDP Growth, 2013-2022 41
Figure 4:Indian Defense Budget Split Between Capital and Revenue Expenditure (%),2013-2022 43
Figure 5: Indian Capital Expenditure (INR billion), 2013-2022 45
Figure 6: Indian Capital Expenditure (US$ billion), 2013-2022 45
Figure 7: Indian Defense Budget Split (%), 2013-2022 46
Figure 8: Indian Defense Expenditure for the army (INR Billion), 2013-2022 48
Figure 9: Indian Defense Expenditure for the army (US$ Billion), 2013-2022 48
Figure 10: Indian Defense Expenditure for the air force (INR Billion), 2013-2022 50
Figure 11: Indian Defense Expenditure for the air force (US$ Billion), 2013-2022 50
Figure 12: Indian Defense Expenditure for the Navy (INR Billion), 2013-2022 52
Figure 13: Indian Defense Expenditure for the Navy (US$ Billion), 2013-2022 52
Figure 14: Indian Per Capita Defense Expenditure (US$), 2013-2022 53
Figure 15: Indian Homeland Security Budget (INR billion), 2013-2022 55
Figure 16: Indian Homeland Security Budget (US$ billion), 2013-2022 56
Figure 17: Terrorism Heat Map, 2017 59
Figure 18: Terrorism Index 62
Figure 19: Benchmarking with Key Markets - 2013-2017 vs. 2018-2022 64
Figure 20: Defense Expenditure of the Worlds Largest Military Spenders (US$ Billion), 2017 and 2022 65
Figure 21: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2017 66
Figure 22: Multi-role Aircraft Market Size (US$ Billion), 2017-2027 68
Figure 23: Missile Defense System Market Size (US$ Billion), 2017-2027 69
Figure 24: Infrastructure Construction Market Size (US$ Million), 2017-2027 71
Figure 25: Indian Defense Import Trend (US$ Million), 2012-2016 (TIV values*) 73
Figure 26: Country-wise Break-up of Indian Defense Imports (%), 2012-2016 (TIV values*) 74
Figure 27: Weapon Category Break-up of Indian Defense Imports (%), 2012-2016 (TIV values*) 75
Figure 28: Indian Defense Export Trend (US$ Million), 2012-2016 (TIV values*) 76
Figure 29: Country-wise Break-up of Indian Defense Exports (%), 2012-2016 (TIV values*) 77
Figure 30: Weapon Category Break-up of Indian Defense Exports (%), 2012-2016 (TIV values*) 78
Figure 31: Industry Dynamics - Porters Five Forces Analysis 79
Figure 32: Bharat Electronics Limited - Revenue Trend Analysis (INR Billion), 2012-2016 122
Figure 33: Bharat Electronics Limited - Operating Profit Trend Analysis (INR Billion), 2012-2016 123
Figure 34: Bharat Electronics Limited - Net Profit Trend Analysis (INR Billion), 2012-2016 123
Figure 35: GDP Per Capita in US$, 2015-2025 141
Figure 36: GDP (current US$ billion), 2015-2025 142
Figure 37: Exports of goods and services (current LCU Billion), 2005-2014 143
Figure 38: Imports of goods and services (current LCU Billion), 2005-2014 144
Figure 39: Gross National Disposable Income (US$ Billion), 2005-2012 145
Figure 40: LCU per USD (period average), 2015-2024 146
Figure 41: Market Capitalization of Listed Companies (US$ Bn) , 2005-2012 147
Figure 42: Market Capitalization of Listed Companies (% of GDP),2005-2012 148
Figure 43: Total Government Cash Surplus/Deficit as % of GDP (LCU), 2005-2012 149
Figure 44: Goods exports as a percentage of GDP,2005-2014 150
Figure 45: Goods imports as a percentage of GDP,2005-2014 151
Figure 46: Service imports as a percentage of GDP, 2005-2014 152
Figure 47: Services exports as a percentage of GDP,2005-2014 153
Figure 48: Foreign direct investment, net (BoP, current US$ Bn), 2005-2014 154
Figure 49: Net foreign direct investment as % of GDP, 2005-2014 155
Figure 50: Mining, Manufacturing, Utilities Output (US$ Bn), 2005-2014 156

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