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India Defense Market - Growth, Trends, and Forecasts (2020 - 2025)

  • ID: 4828182
  • Report
  • June 2020
  • Region: India
  • 72 pages
  • Mordor Intelligence

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FEATURED COMPANIES

  • Hinduja Group
  • Kalyani Group
  • Mahindra & Mahindra Ltd.
  • Reliance Group
  • Rostec
  • Tata Sons Private Limited
  • MORE
The India defense market is anticipated to register a CAGR of over 4% during the forecast period 2020 - 2025.
  • The geopolitical conflicts of India with neighboring nations and the threat due to terrorism have forced the country to further reinforce its perimeter security and the naval and airborne capabilities.
  • The country is constantly increasing its defense expenditure and the budget for 2019, valued at USD 44.6 billion, is its largest ever. The increasing defense budget is expected to drive market growth during the forecast period.
  • India is striving for self-sufficiency by promoting ‘Make in India’ initiative in its defense through focused, sustained, and evolved indigenization programs. This may provide new opportunities for players for growth in the Indian market.
Key Market Trends

Army Segment Held the Largest Revenue Share in 2019

As of 2019, the Army Segment has the highest market share out of all the segments. Modernization and capability development of the Indian Army is taking place at a rapid pace. To modernize the army Indian government in 2017 announced plans for the replacement of INSAS rifles with rifles capable of firing 7.62×51 mm NATO cartridges. Following this, to facilitate the replacement of old INSAS rifles, in February 2019, India signed a contract with a US firm for 72,400 assault rifles at a cost of around USD 100 million, and the first batch of 10,000 rifles were delivered in December 2019. The planned procurement/upgrades of a number of Air Defense Guns and equipment are also expected to further enhance the capability of ground-based Air Defense. India is also in talks with the United States to procure National Advanced Surface-to-Air Missile System-II (NASAMS-II), an advanced air defense system at USD 1 billion. Also, in October 2018, India’s Ministry of Defense (MoD) has approved the procurement of 1,000 new engines for the Indian Army’s T-72M1 Ajeya main battle tanks (MBT). In November 2019, the Ministry of Defense signed a contract worth USD 2.8 billion with Ordnance Factory Board to license build 464 additional T-90s main battle tanks for the Indian Army. Such developments, along with several other plans to modernize the country's armed forces, may also help the growth of the segment in the years to come.

Make In India Initiative Promoting Indigenous Manufacturing Capabilities in India.

Many initiatives are being taken by the Indian Department of Defense to promote ‘Make in India’ in the defense manufacturing sector. The Department of Defense Production (DDP) has established wide-ranging production facilities for the production of various defense equipment through Defense Public Sector Undertakings (DPSUs) and the Ordnance Factories. The products manufactured include heavy vehicles, arms and ammunition, tanks, armored vehicles, helicopters, fighter aircraft, warships, submarines, missiles, electronic equipment, earth moving equipment, special alloys, and special purpose steels. IAF is working towards obtaining self-sufficiency by promoting ‘Make in India’ through focused, sustained, and evolved Indigenization Programs. IAF currently focuses on reducing the dependency on the import of defense equipment. IAF has inducted Light Combat Aircraft, Akash Missile, Advance Light Helicopters (ALH) in the recent past. IAF also plans to induct more capable and potent LCA Mk-IA in the future. It is also actively supporting DoD of LCH, RPAs, Medium Power Radars, Low-Level Tracking Radars, and other systems and closely coordinating with DRDO for the development of various types of state-of-the-art weapons. Manufacturing of Ka-226 T helicopters, Close in Weapon System and Single Engine Fighter aircraft under the ‘Strategic Partner’ model is also in line with the ‘Make in India’ initiative. India is also working on HAL Advanced Medium Combat Aircraft (AMCA) programme to develop a fifth-generation fighter aircraft. The Aeronautical Development Agency (ADA) is responsible for designing the plane and Hindustan Aeronautics Limited (HAL) is responsible for assembly. The AMCA will be unveiled in 2024, and first flight is expected in between 2025 and 2026. The production of the aircraft is expected to begin in 2029. The Shipyard has also made considerable progress in the implementation of ‘Make in India’ Program. Indigenization of Steel Plates, Gearboxes, Steering Gear system, Fin Stabilizer System, Heli Grid, Doors (Water & Weather tight) and Gemini Boats have increased the indigenous content to 70% in ongoing five CG OPV Project compared to 62% indigenous content in recently completed Coast Guard Offshore Patrol Vessel (CG OPV) project. In addition, under the ‘Make in India’ initiative, Indian government, in February 2018, announced projects like, Uttar Pradesh Defense Corridor (UPDC). The UPDC is estimated to attract investments worth INR 200 billion. Defense PSUs like Ordnance Factory Board had announced investments worth INR 37 billion in the UPDC. In DEFEXPO 2020, MoUs worth INR 50 billion was signed by 23 companies with the state government. To attract investors state government has offered major incentives including reimbursement of 25% of land cost, transportation subsidy, and reimbursement of 75% of the cost of technology transfer to anchor units. Thus, various ongoing developments may lead to a growth in the indegenous development ad manufacturing of various defense technologies in India in the near future.

Competitive Landscape

Hindustan Aeronautics Limited (HAL), Ordnance Factory Board (OFB), Rafael Advanced Defense Systems Ltd., Rostec, Lockheed Martin Corporation are some of the major players in the Indian Defense market currently. The Make in India initiative, launched by the Indian Government, has propelled several partnerships between foreign and local manufacturers. Partnerships between companies like Hinduja Group, Ashok Leyland and Elbit Systems for military vehicles, the Tata Motors tie-up with Bharat Forge and General Dynamics, the partnership between India and Russia for Frigates and AK-203 Assault Rifles, Boeing's partnership with HAL and Mahindra for the production of F/A-18 Super Hornet fighters are some of the major partnerships in the recent past, which were a result of the Make in India initiative. India is also trying to develop its indigenous manufacturing capabilities and is now focusing on increasing the product range of the defense equipment that it can produce locally, thereby reducing its dependency on the import of defense equipment. Also, several public firms are working on the development of new indigenous technologies. For instance, in February 2020, Research and Development Establishment (Engineers), DRDO and BEML Ltd announced a long-term partnership through license agreement transfer of technology for indigenous development of new technology of mine Field Marking Equipment Mk-II (MFME Mk-II) which will be used by Indian army for the detection of mine area. Such partnerships are expected to enhance the technology transfer between the firms during the forecast period.

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FEATURED COMPANIES

  • Hinduja Group
  • Kalyani Group
  • Mahindra & Mahindra Ltd.
  • Reliance Group
  • Rostec
  • Tata Sons Private Limited
  • MORE
1 INTRODUCTION
1.1 Study Assumptions
1.2 Scope of the Study

2 RESEARCH METHODOLOGY

3 EXECUTIVE SUMMARY

4 MARKET DYNAMICS
4.1 Market Overview
4.2 Market Drivers
4.3 Market Restraints
4.4 Porter's Five Forces Analysis
4.4.1 Threat of New Entrants
4.4.2 Bargaining Power of Buyers/Consumers
4.4.3 Bargaining Power of Suppliers
4.4.4 Threat of Substitute Products
4.4.5 Intensity of Competitive Rivalry

5 MARKET SEGMENTATION
5.1 Armed Force
5.1.1 Air Force
5.1.1.1 Training and Simulation
5.1.1.2 Communication Systems
5.1.1.3 Weapons and Ammunitions
5.1.1.4 Manned and Unmanned Aerial Vehicles
5.1.2 Army
5.1.2.1 Personal Training and Protection
5.1.2.2 Communication Systems
5.1.2.3 Weapons and Ammunitions
5.1.2.4 Manned and Unmanned Aerial Vehicles
5.1.3 Navy
5.1.3.1 Weapons and Ammunitions
5.1.3.2 Sea-based Manned and Unmanned Vehicles
5.1.3.3 Communication Systems

6 COMPETITIVE LANDSCAPE
6.1 Company Profiles
6.1.1 Hindustan Aeronautics Limited (HAL)
6.1.2 Defense Research and Development Organisation (DRDO)
6.1.3 Ordance Factory Board (OFB)
6.1.4 Bharat Electronics Limited (BEL)
6.1.5 Goa Shipyard Limited (GSL)
6.1.6 Hinduja Group
6.1.7 Kalyani Group
6.1.8 Tata Sons Private Limited
6.1.9 Reliance Group
6.1.10 Mahindra & Mahindra Ltd.
6.1.11 Rafael Advanced Defense Systems Ltd.
6.1.12 Israel Aerospace Industries
6.1.13 Rostec
6.1.14 United Aircraft Corporation
6.1.15 The Boeing Company

7 MARKET OPPORTUNITIES AND FUTURE TRENDS
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  • Hindustan Aeronautics Limited (HAL)
  • Defense Research and Development Organisation (DRDO)
  • Ordance Factory Board (OFB)
  • Bharat Electronics Limited (BEL)
  • Goa Shipyard Limited (GSL)
  • Hinduja Group
  • Kalyani Group
  • Tata Sons Private Limited
  • Reliance Group
  • Mahindra & Mahindra Ltd.
  • Rafael Advanced Defense Systems Ltd.
  • Israel Aerospace Industries
  • Rostec
  • United Aircraft Corporation
  • The Boeing Company
Note: Product cover images may vary from those shown

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