Defense Market Report 2026

The defense market size has grown strongly in recent years. It will grow from $506.9 billion in 2025 to $542.72 billion in 2026 at a compound annual growth rate (CAGR) of 7.1%. The growth in the historic period can be attributed to rising geopolitical tensions driving increased procurement of air-, sea-, and land-based defense equipment, expansion of military modernization programs across major nations, growth in demand for auxiliary systems such as radar, sonar, and satellites, increased investment in maintenance repair and overhaul (mro) for existing defense platforms, technological advancements improving performance and integration of multi-domain defense systems.

The defense market size is expected to see strong growth in the next few years. It will grow to $739.43 billion in 2030 at a compound annual growth rate (CAGR) of 8%. The growth in the forecast period can be attributed to anticipated rise in defense spending supporting next-generation platform development, growing adoption of autonomous and unmanned defense systems across all domains, advancements in space-based defense capabilities including military satellites, increasing focus on integrated command-and-control and network-centric warfare systems, expansion of defense mro and support services driven by larger and older global fleets. Major trends in the forecast period include increased demand for multi-domain defense platforms, growth in modernization of land, air, and naval fleets, rising focus on long-range strike and missile defense systems, expansion of defense maintenance, repair & overhaul (mro) services, strengthening of indigenous defense manufacturing capabilities.

Rising defense expenditures are projected to drive the growth of the defense market in the coming years. Defense expenditure refers to the financial resources allocated by a nation for the establishment and upkeep of its armed forces or other necessary defense measures. These expenditures fund the defense industry, which encompasses the design, production, and maintenance of military equipment. For example, in April 2024, the Stockholm International Peace Research Institute (SIPRI), a Sweden-based non-governmental organization, reported that global military spending reached $2.44 trillion in 2023, reflecting a 6.8% increase in real terms compared to 2022. Thus, the rise in defense expenditure is fueling the growth of the defense market.

Companies within the air-based defense equipment manufacturing sector are increasingly focusing on the development of autonomous fighter jets. These jets are capable of flying without human pilots and can operate for extended periods. Equipped with sensors, autonomous jets can scan for potential threats and process a large amount of information simultaneously. They are designed to gather intelligence on enemy activities, disrupt the electronic systems of hostile aircraft, and eliminate airborne threats. Keeping pace with this trend, in October 2024, Leonardo, an Italy-based multinational specializing in aerospace, defense, and security, launched BriteStorm. This system is intended to provide stand-in jamming capabilities, serving as an airborne disruptor against various enemy threats. Its flexibility allows for installation on multiple platforms and compatibility with different UAV types, offering militaries deployment versatility. Additionally, its digital deception methods can counter sophisticated radar systems by creating ghost aircraft signatures, making it more challenging for adversaries to identify actual threats.

In December 2024, Rheinmetall, a Germany-based defense company specializing in military vehicle systems and components, acquired Loc Performance Products for $950 million. This acquisition enhances Rheinmetall’s manufacturing capabilities in the United States and broadens its presence in military vehicle components. By integrating Rheinmetall’s advanced vehicle technologies with Loc Performance Products’ expertise, the company aligns with its strategy to strengthen global defense solutions. Loc Performance Products is a US-based manufacturer of military vehicle components.

Major companies operating in the defense market are Lockheed Martin Corporation, Raytheon Technologies Corporation, Northrop Grumman Corp, General Dynamics, The Boeing Company, BAE Systems plc, L3Harris Technologies, Leonardo SpA, Thales Group, Huntington Ingalls Industries Inc, Excel Laser Technology Private Limited, Prakash Laser, Infrared Optics, Kalaimakal Systems Private Limited, Baoding Triangel Rsd Electronics Technology Limited, Beijing Be-Better Technology Co., Ltd, Shanghai Zhangjiagang Baorui Machinery Co., Ltd, Guangzhou Blixun Electronics Co., Ltd, Xi'an Lonn M&E Equipment Co., Ltd, General Atomics Aeronautical Systems, Elbit Systems Ltd, AeroVironment, China South Industries Group (CSGC), China Aerospace Science and Industry Corporation (CASIC), China North Industries Group Corporation Limited (Norinco), Changhe Aircraft Industries Corporation, Shenyang Aircraft Corporation, Babcock International, BMARC, BMT Group, CBI Explosives Industry Group, HSE Explosives, Chemring Energetics UK Ltd, Orica UK Ltd, CES Advanced Composites UK Ltd, Conjay Collectors Ammunition Company Ltd, Societe Suisse des Explosifs, SSE Group, BIAZZI SA, Almaz-Antey, United Aircraft Corporation, Tactical Missiles Corporation, Russian Helicopters, Uralvagonzavod, United Shipbuilding Corporation, Advanced Composites Solutions, AEL Sistemas, Aeromot, Agrale, Airship do Brasil, Telespazio, ARSAT, Airbus SE, Saudi Arabian Military Industries (SAMI), Advanced Electronics Company, Abu Dhabi Ship Building (ADSB), DragonFly Aerospace, Armscor, Atlantis Diesel Engines, Atlas Aircraft Corporation, OneWeb.

Asia-Pacific was the largest region in the defense market in 2025. Western Europe is expected to be the fastest growing region in the forecast period. The regions covered in the defense market report are Asia-Pacific, South East Asia, Western Europe, Eastern Europe, North America, South America, Middle East, Africa.

Note that the outlook for this market is being affected by rapid changes in trade relations and tariffs globally. The report will be updated prior to delivery to reflect the latest status, including revised forecasts and quantified impact analysis. The report’s Recommendations and Conclusions sections will be updated to give strategies for entities dealing with the fast-moving international environment.

Tariffs are reshaping the defense market by increasing procurement costs for aircraft components, naval systems, armored vehicles, and electronic subsystems, impacting both production timelines and supply chain stability. Air-based and land-based equipment segments are most affected, along with regions heavily dependent on cross-border sourcing such as Asia-Pacific and Europe. While tariffs create cost pressures, they also stimulate positive outcomes such as accelerated domestic manufacturing, reduced import reliance, and strengthened local defense supply chains.

The defense market research report is one of a series of new reports that provides defense market statistics, including defense industry global market size, regional shares, competitors with a defense market share, detailed defense market segments, market trends and opportunities, and any further data you may need to thrive in the defense industry. This defense market research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future scenarios of the industry.

Defense encompasses a spectrum of activities, including the manufacture of military equipment for air, sea, and land, comprising support and auxiliary components such as radar, satellites, sonars, and related equipment. Additionally, defense involves the maintenance, repair, and overhaul of military equipment.

The primary defense categories include air-based defense equipment, sea-based defense equipment, land-based defense equipment, maintenance, repair, and overhaul services for defense equipment, defense support, and auxiliary equipment. Air-based defense equipment comprises auxiliary components such as radar, satellites, sonar, and other support equipment. Operations within this domain span autonomous defense equipment and manuals, involving diverse platforms such as airborne, land-based, and naval systems.

The countries covered in the defense market report are China, India, Japan, Australia, Indonesia, South Korea, Bangladesh, Thailand, Vietnam, Malaysia, Singapore, Philippines, Hong Kong, Taiwan, New Zealand, UK, Germany, France, Italy, Spain, Austria, Belgium, Denmark, Finland, Ireland, Netherlands, Norway, Portugal, Sweden, Switzerland, Russia, Czech Republic, Poland, Romania, Ukraine, USA, Canada, Mexico, Brazil, Chile, Argentina, Colombia, Peru, Saudi Arabia, Israel, Iran, Turkey, UAE, Egypt, Nigeria, South Africa.

The defense market consists of sales of air-based, sea-based, and land-based defense equipment such as military aircraft, helicopter, satellites, and radars, as well as support services. Values in this market are ‘factory gate’ values, that is the value of goods sold by the manufacturers or creators of the goods, whether to other entities (including downstream manufacturers, wholesalers, distributors, and retailers) or directly to end customers. The value of goods in this market includes related services sold by the creators of the goods.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.

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