Defence Equipment Market: Development of Defence Industrial Base Across Prominent Countries
Defence equipment is of utmost importance in the field of defence and border security operations of many countries located in different regions across the globe. The increase in armed clashes with the deployed troops at sensitive borders has resulted in a consequent increase in demand for innovative and robust defence equipment by numerous countries. Especially in the Middle East and Asia due to extensive geopolitical conflicts and claims of illegal encroachments by neighboring countries. These situations have encouraged the governments and armies across these regions to procure and deploy technologically advanced and reliable defence equipment in the armory of their forces.
Considerable investments in the defence sector and upgradation of armed forces by prominent countries such as the U.S., China, Russia, and India have further propelled the sales of defence equipment. Additionally, to counter the increasing threat posed by terrorism in countries, such as Afghanistan, Syria, and Iraq, many countries with established and strong military forces are deploying troops. This leads to an increase in the procurement of defence equipment for seamless supply to the troops operating in such regions.
Many countries are becoming self-reliant and are trying to develop a powerful and efficient defence equipment manufacturing cluster within their countries, attracting numerous global market players to increase their sales footprints across these potential regions. Many manufacturers are trying to establish their manufacturing facilities in diverse locations to increase their market share and ensure an easy and fast supply of their products in emerging markets.
The global defence equipment market is expected to grow at a 4.4% CAGR during the forecast period.
Increased Demand for Ballistic and Guided Missiles, Software, and Biological Warfare Equipment
The development of long-range, GPS-guided, and radar-based defence equipment provides lucrative development opportunities for the market. The current research and development initiatives by numerous manufacturers across the globe provide strong growth prospects for the defence equipment market in the forecast years.
» Raytheon, a prominent defence equipment manufacturer, is currently working on the development of Anti-Submarine Warfare Continuous Trail Unmanned Vessel (ACTUV). ACTUV allows stealth tracking of enemy submarines and provides surveillance to protect the water boundaries of the country to ensure effective counters to the threat of ultra-quiet enemy submarines.
» Boeing has filed a patent to develop blast-proof automotive vehicles that can protect themselves from blast damage by the creation of a plasma field around the vehicles. These vehicles are capable of creating an airfield around themselves and deflecting the incoming attack to protect from the damage. This technology is expected to garner strong interest from numerous countries to build more advanced and powerful land-based troops.
Thus, the development of advanced and effective defence equipment is attracting significant traction of customers towards the market.
COVID-19 Impact: Restraints on manufacturing Operations to Limit Market Growth
COVID–19 has caused significant breakdowns in the value chains of multiple business sectors across the globe. The disease has been declared by the World Health Organization as a global pandemic. After the outbreak of COVID–19, many defence equipment manufacturers faced considerable disruptions in their value chain and supply chain management. Import and export operations also faced hardships due to restrictions on the trade of non-essential commodities.
Additionally, a reduction in revenue generation of governments across the globe and subsequently decreased expenditure on defence projects during the pandemic further curbed market growth across most regions. Many global manufacturers decided to halt operations, which decreased the overall production of defence equipment across the market.
Army Segment is Projected to Attain Noteworthy Share in the Global Market
Strong development initiatives by governments, such as the government of India, have prompted the development of the army segment in the global market. Many countries are making significant investments in strengthening their land-based troops, which has augmented the development initiatives of the army segment in the global market. Some countries are even scheduling common training programs and practice sessions of their armed forces as an effort to strengthen bilateral ties and improve relations. The increasing trend of these scheduled practice sessions is set to bolster the sales of defence equipment in the army segment across the globe.
The land-based army segment is identified as the largest component of the armed forces by numerous countries, which is another reason behind the major share of the segment in the market. In the recent past, land-based troops have witnessed a major shift in their mode of operations as many governments have increased the use of digital technologies in their defence equipment. This has transformed their armies into digital and efficient forces to tackle challenging and intense situations. The current shift in the mode of operation of land-based troops is projected to reinforce the share of the army segment in the global market.
North America is Anticipated to Hold Dominant Revenue Share in the Global Market
In the recent past, the massive spending for defence equipment procurement, training programs, and R&D division operations in the U.S. has helped North America in emerging as a market leader. The investments in weapons procurement and R&D operations alone by the U.S. were expected to be more than the complete defence budget of the Republic of China. North America also widened the gap between the defence equipment market of Europe as the U.S.’s defence investments were four times higher than the combined expenditure of the European Union. This growth of North America is due to the increment in defence expenditure by the U.S., which wants to develop at a rapid pace.
The security commitments and treaties with numerous nations across the globe have made hefty investments in the procurement of defence equipment obligatory for the U.S. Furthermore, security accords and close bilateral relationships with the governments of diverse nations increased the requirement of U.S. armed troops, which can provide spurring development to the region.
Asia-Pacific Expected to Register Promising Growth Over the Forecast Period
Asia-Pacific is set to develop at a rapid pace due to considerable investments by countries such as China and India. Sensitive international boundaries and increasing conflicts between the countries in these regions are leading to an increase in procurement and deployment of defence equipment in the region. For instance, India has always witnessed hostile and difficult situations at the line of control, which increased the need for advancements of armed forces.
The significant emergence of defence equipment manufacturers operating from China is driving the adoption and utilization of the performance parts in the region. The proclivity of vehicle users in the region towards effective customization in vehicles to ensure better fuel efficiency and powerful operation of the engine is bolstering the sales of defence equipment in the region.
Players operating in this market include Dassault Aviation, BAE Systems, Rafael Advanced Defence Systems Ltd, Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL), Lockheed Martin, General Dynamics (GD), Northrop Grumman, BAE Systems, Airbus Group, Raytheon, Huntington Ingalls Industries, Honeywell International, Textron, Mitsubishi Heavy Industries, and General Electric, among others. Many market players are adopting effective market strategies such as venturing into long-term supply agreements and developing custom equipment parts or developing tailored equipment as per the demand of the customer.
The defence equipment market is moving towards consolidation with the prominent players emphasizing mergers and acquisitions with smaller entities operating in the market. Global market players are trying to increase their reach, appeal to the customers, and grow sales footprints in the market by making significant investments in the R&D division to ensure the development of products with better quality and advanced technologies.
Defence Equipment Market: Segmentation
By Product Type
By Sales Channel
Frequently Asked Questions (FAQs)