Defense

Market Brief

Army Expenditure in India to 2018: Market Brief

Reference code: DF2258MB Published: May 2013

www.strategicdefenceintelligence.com

TABLE OF CONTENTS

TABLE OF CONTENTS
1 Introduction ........................................................................................................................... 5
1.1 What is this Report About? ................................................................................................................5 1.2 Definitions .........................................................................................................................................5 1.3 Summary Methodology .....................................................................................................................7

Army Expenditure in India: Market Size and Forecast ....................................................... 9

2.1 Historic Market Size ..........................................................................................................................9 2.2 Forecast Market Size ......................................................................................................................10

Defense Expenditure in India: Historic and Forecast Segmentation ............................. 11

3.1 Historic Segmentation .....................................................................................................................11 3.2 Forecast Segmentation ...................................................................................................................12

Appendix .............................................................................................................................. 13
4.1 Contact Us ......................................................................................................................................13 4.2 About SDI........................................................................................................................................13 4.3 Disclaimer .......................................................................................................................................13

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TABLE OF CONTENTS

LIST OF FIGURES
Figure 1: India Historic Army Expenditure, US$ Billion, 2009-2013 .............................................................................................................................. 9 Figure 2: India Forecast Army Expenditure, US$ Billion, 2013-2018 .......................................................................................................................... 10 Figure 3: India Historic Defense Segmentation, (%), 2009-2013 ................................................................................................................................ 11 Figure 4: India Forecast Defense Segmentation, (%), 2013-2018 .............................................................................................................................. 12

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TABLE OF CONTENTS

LIST OF TABLES
Table 1: India Historic Army Expenditure, US$ Billion, 2009-2013 ............................................................................................................................... 9 Table 2: India Forecast Army Expenditure, US$ Billion, 2013-2018 ........................................................................................................................... 10 Table 3: India Historic Defense Segmentation, US$ Billion, 2009-2013 ..................................................................................................................... 11 Table 4: India Forecast Defense Segmentation, US$ Billion, 2013-2018 ................................................................................................................... 12

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INTRODUCTION

Introduction
1.1 What is this Report About?
This report offers insights on Army expenditure of Indian Defense industry. It also provides data on the overall segmentation of the industry for historic and forecast years.

1.2 Definitions
For the purpose of this report, the following timeframes apply: Review period: 2009 to 2013 Forecast period: 2013 to 2018

Following are the definitions of expenditure considered for the purpose of this report. Revenue expenditure includes troop training, institutional education, construction and maintenance of various undertakings. It also covers the salaries, allowances, pensions, transportation, food, insurance, welfare benefits and miscellaneous expenditures pertaining to all unit allowances for training, contingency and other grants for officers, non-commissioned officers, enlisted men and contracted civilians. Capital expenditure (capex) covers research and development (R&D), procurement, maintenance, transportation and storage of weaponry and other equipment. It also includes expenditure on aircraft and aero engines, heavy and medium vehicles, naval equipment and expenditure on the purchase of land, construction, plants and machinery. Total defense expenditure includes administrative- and maintenance-related functions such as salary, buying spares, general stores, food, medical stores, and other supplies. The following are definitions of defense categories: Military hardware refers to the broad range of machinery, systems, equipment and weapons used by defense forces. Air defense systems are defined as all measures designed to nullify or reduce the effectiveness of hostile air action. They include ground and air based weapon systems, associated sensor systems, command and control arrangements and passive measures. This may be to protect naval, ground and air forces wherever they are positioned, but does not include the missile defense system. Missile defense systems are systems, weapons, or technologies involved in the detection, tracking, interception and destruction of attacking missiles. Naval defense systems are used to protect sea lanes, ferry troops, or attack other navies, ports, or shore installations. It includes surface ships, amphibious ships, submarines, and seaborne aviation. Homeland security (HLS) involves the protection of a countrys civilians and critical infrastructure from natural or man-made disaster. Its margins extend to border and maritime patrol, customs checks in ports and airports, search and rescue operations, disaster recovery, combating terrorism and cyber attacks.

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INTRODUCTION The following are miscellaneous definitions: Indirect offsets involve both barter and counter trade deals, investment in the buying country, or the transfer of technology unrelated to the weapons being sold. Direct offsets is defined as an arrangement wherein the purchaser receives work or technology directly related to the weapons sale, typically by producing the weapon system or its components under license. Multipliers are additional credits assigned over and above the market value provided to offsets for a technology, product or service being offered. Command, control and communications and intelligence system (C3I) refers to an information system employed by a militarys top command to direct its forces. This system provides the military with information on various parameters associated with executing a strategy during a military exercise. The parameters include reconnaissance and surveillance, troop positions, inventory levels and weather conditions. The communication system enables the transfer of images and video captured by surveillance systems and data and voice between the command and control center. In addition, the system aids in joint operations between the Army, Army and air force. Maintenance, repair and overhaul (MRO) involves the servicing of a defense system with the objective of restoring it to a state where it can perform its intended function. It could be routine maintenance, replacement of faulty spare parts or checking the entire system to ensure smooth functioning. Airborne early warning and control systems (AEW&C) are airborne radar systems used by the military to detect the movement of aircraft in its airspace. Used at high altitudes, they are used in both defensive and offensive air operations and have the ability to help distinguish between civilian and military aircraft.

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INTRODUCTION

1.3 Summary Methodology

All Strategic Defence Intelligence reports are rigorously sourced and created according to a comprehensive four-stage methodology: 1) Market Study A) Standardization Market definitions are specified using recognized industry classifications. The same definition is used for every country Annual average currency exchange rates for the latest complete year are collected. These are applied across both the historical & forecast data to remove exchange rate fluctuations B) Internal Audit Review of in-house databases to gather existing data: o Historic market databases & reports o Company database o Magazine portfolio 2) Research A) Sources Collection of the latest market-specific data from a wide variety of respected industry sources: o Government statistics o Industry associations o Company filings o Broker reports o International organizations B) Expert Opinion Collation of opinion taken from Strategic Defence Intelligence journalist interviews of leading industry figures Analysis of third party opinion & forecasts: o Broker reports o Industry associations o Defense media o Official government sources C) Data Consolidation & Verification Consolidation of data & opinion to create historical datasets Creation of models to benchmark data across sectors and geographies

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INTRODUCTION

3) Analysis A) Market Forecasts Feed of forecast data into market models: o Macroeconomic indicators o Industry-specific drivers B) Report Writing Analysis of market data Discussion of industry trends & issues Integration of survey results 4) Quality Control A) Templates Detailed process manuals Standardized report templates & accompanying style guides Complex forecasting tool used to ensure forecast methodologies are consistently applied QC checklists B) QC Process Peer review Senior Level QC Randomized spot checks on data integrity Benchmark checks across databases

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MARKET DATA

Army Expenditure in India: Market Size and Forecast

2.1 Historic Market Size
The Indian Army budget reached to a value of US$19.1 billion in 2013, an increase of 14.1% on 2012. The segment achieved a CAGR of 4.76% over 2009-2013. Table 1: India Historic Army Expenditure, US$ Billion, 2009-2013
Year 2009 2010 2011 2012 2013
C

US$ Billion 15.9 17.2 18.1 16.8 19.1 C AGR 2009-13

% Growth

8.0% 5.5% -7.4% 14.1% 4.76% / SDI

Source: Strategic Defence Intelligence Analysis

Figure 1: India Historic Army Expenditure, US$ Billion, 2009-2013

25.0 20.0%

20.0

15.0%

10.0%
US$ Billion

15.0 5.0% 10.0 0.0%

5.0

-5.0%

0.0

-10.0%

2009

2010

2011
Market Size

2012
Growth Rate (%)

2013

Source: Strategic Defence Intelligence Analysis

/ SDI

Army Expenditure in India to 2018: Market Brief Strategic Defence Intelligence. This product is licensed and is not to be photocopied

Published: May 2013

Growth Rate (%)

Page 9

MARKET DATA

2.2 Forecast Market Size

The Indian Army budget is forecast to reach US$37.3 billion in 2018; an increase of 94.8% on 2013. This is forecast to result in a CAGR of 14.26% from 2013 through 2018. Table 2: India Forecast Army Expenditure, US$ Billion, 2013-2018
Year 2013 2014 2015 2016 2017 2018
C

US$ Billion 19.1 22.5 24.6 28.4 32.9 37.3 C AGR 2013-18

% Growth

17.6% 9.1% 15.6% 15.7% 13.4% 14.26% / SDI

Source: Strategic Defence Intelligence Analysis

Figure 2: India Forecast Army Expenditure, US$ Billion, 2013-2018

40.0 20.0%

35.0 30.0

18.0% 16.0% 14.0%

US$ Billion

25.0 20.0 15.0 10.0

12.0% 10.0% 8.0% 6.0% 4.0%

5.0

2.0% 0.0% 2013 2014 2015 Market Size 2016 2017 2018 Growth Rate (%)
/ SDI

0.0

Source: Strategic Defence Intelligence Analysis

Army Expenditure in India to 2018: Market Brief Strategic Defence Intelligence. This product is licensed and is not to be photocopied

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Growth Rate (%)

IMPORTS AND EXPORTS DYNAMICS

Defense Expenditure in India: Historic and Forecast Segmentation

3.1 Historic Segmentation
With a market size of US$19.1 billion in 2013, Army segment in India equated to a share of 51.0% of the overall defense industry. The segment stood largest within the industry. Table 3: India Historic Defense Segmentation, US$ Billion, 2009-2013
Category Army Air Force Navy Others Overall Source: Strategic Defence Intelligence Analysis Market Size 19.1 9.8 6.0 2.6 37.5 % Share 51.0% 26.0% 16.0% 7.0% 100.0% / SDI

Figure 3: India Historic Defense Segmentation, (%), 2009-2013

Others, 7.0%

Navy, 16.0%

Army, 51.0%

Air Force, 26.0%

Source: Strategic Defence Intelligence Analysis

/ SDI

Army Expenditure in India to 2018: Market Brief Strategic Defence Intelligence. This product is licensed and is not to be photocopied

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IMPORTS AND EXPORTS DYNAMICS

3.2 Forecast Segmentation

With a market value of US$37.3 billion, the Army segment in India is expected to occupy a share of 53.1% of the overall defense industry by 2018. The segment is expected to be the largest within the industry. Table 4: India Forecast Defense Segmentation, US$ Billion, 2013-2018
Category Army Air Force Navy Others Overall Source: Strategic Defence Intelligence Analysis Market Size 37.3 16.2 11.2 5.5 70.2 % Share 53.1% 23.1% 16.0% 7.8% 100.0% / SDI

Figure 4: India Forecast Defense Segmentation, (%), 2013-2018

Others, 7.8%

Navy, 16.0%

Army, 53.1%

Air Force, 23.1%

Source: Strategic Defence Intelligence Analysis

/ SDI

Army Expenditure in India to 2018: Market Brief Strategic Defence Intelligence. This product is licensed and is not to be photocopied

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APPENDIX

Appendix
4.1 Contact Us
If you have any queries about this report or would like further information, please contact icdreports@progressivedigitalmedia.com

4.2 About SDI

SDI is a premium business information brand specializing in industry analysis.

4.3 Disclaimer
All Rights of this Report are reserved No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, SDI. The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings, conclusions and recommendations that SDI delivers will be based on information gathered in good faith from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such, SDI can accept no liability whatsoever for actions taken based on any information that may subsequently prove to be incorrect.

Army Expenditure in India to 2018: Market Brief Strategic Defence Intelligence. This product is licensed and is not to be photocopied

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