An archetypal defence market comprises sales of air-based, sea-based and land-based military equipment. The defence manufacturing sector is made up of entities involved in producing large military equipment; it also includes manufacturing auxiliary equipment radars, satellites, sonars etc. The scope of defence equipment manufacturers often extends to maintenance and repair of equipment. As per a recent study by the Business Research Company, the global defence market size is estimated to grow from $452.69 billion in 2021 to $483.47 billion in 2022 at a compound annual growth rate (CAGR) of 6.8%. The market growth is a direct consequence of defence manufacturing companies recalibrating their strategies post COVID-19. Several functional challenges including social distancing, remote working and in some cases, the closure of commercial activities are now easing up. And if the same trend continues, the sector is forecasted to reach $604.82 billion in 2026 at a CAGR of 5.8%. The figures are said to go up further thanks to the ongoing Russia Ukraine armed conflict.
The Global Defence Market Segments
By Type
- Air-Based Defence Equipment
- Sea-Based Defence Equipment
- Land-Based Defence Equipment
- Defence Equipment Maintenance
- Repair and Overhauling Services
- Defence Support and Auxiliary Equipment
By Operation
- Autonomous Defence Equipment
- Manual
By Platform
- Airborne
- Land
- Naval
Subsegments Covered
- Fighter Aircrafts, Helicopters, Gliders & Drones
- Battle Force Ships (Aircraft Carriers, Frigates Destroyers etc.
- Submarines (including Nuclear Submarines)
- Armoured Vehicles, Missiles, Tanks, Small Arms and Light Weapons
- Air/water/land-based Defence Equipment MRO Services
- Military Radars, Satellites & Other Auxiliary Equipment
Recent trends defining the sector
Adoption of unmanned combat vehicles is a major trend sweeping this market sector. Such vehicles run without any physical human intervention thereby drastically reducing loss of human lives. They are deployed alongside infantry and can destroy enemy armoured personnel carriers, other vehicles and troops. Corner shot weapons are gradually becoming popular across the globe due to the inbuilt safety features. These are specialized weapon accessories, basically a hinged chassis installed to a pistol or a handgun, or a Beretta 92. Players in the air-based defence equipment manufacturing market are leaning more towards the development of autonomous fighter jets; these jets can be flown without physical human intervention thus reducing war casualties.
Major players and markets in defence equipment manufacturing
Lockheed Martin Corporation, Raytheon Technologies Corporation, The Boeing Company, Raytheon Co, Northrop Grumman Corp, Bae Systems plc, Airbus Group SE, Leonardo SpA, Thales group, and General Dynamics.
Asia Pacific was the biggest area in the defence market in the year 2021. Western Europe is forecasted to be the fastest growing region in the coming period.
Defence manufacturing industry – The Indian perspective
The Indian defence manufacturing industry is a major contributor to the economy. The industry’s growth rate is rising by the day thanks to national security concerns. Demand for defence equipment is experiencing steady growth mainly due to the nation’s ongoing territorial disputes with Pakistan and China. India is now ranked among the world’s top importers of defence equipment. To reduce dependence on imports and to modernize its armed forces, India has recently launched the ‘Make in India’ initiative. It is also a means to gain tactical superiority over rival nations like China and Pakistan.
Interesting Indian statistics
- The defence manufacturing sector achieved a CAGR of 3.9% between 2016 and 2020
- Government has set the defence manufacturing target at US$ 25.00 billion by 2025 (including US$ 5 billion from exports by 2025)
- Defence exports of the country were estimated to be at US$ 1.29 billion in 2019-20
- The defence import value stood at US$ 463 million for FY20 with projections of US$ 469.5 million in FY21
- Plans to export military hardware worth US$ 5 billion (INR 35,000 Crore) in the next 5 years
- Ranked 19th (2019) in the list of top defence exporters in the world; it exported defence products to 42 countries
- Plans to deploy new defence equipment manufacturing infrastructure to encourage the participation of SMEs and startups
- FDI allowed up to 74% through automatic route; beyond 74% with permission from the government
- Infusion of new foreign investments up to 49% for existing Licensees; can be added by making declarations of change/transfer within 30 days
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