This report provides readers with detailed analysis of both historic and forecast defense industry values, factors influencing demand, the challenges faced by industry participants, analysis of industry leading companies, and key news.
The report offers detailed analysis of Pakistani defense industry with market size forecasts covering the next five years. The report will also analyze factors that influence demand for the industry, key market trends, and challenges faced by industry participants.
In particular, the report provides an in-depth analysis of the following:
Pakistani defense industry market size and drivers: detailed analysis of Pakistani defense industry during 2020-2024, including highlights of the demand drivers and growth stimulators for the industry. It also provides a snapshot of the country's expenditure and modernization patterns
Budget allocation and key challenges: insights into procurement schedules formulated within the country and a breakdown of the defense budget. It also details the key challenges faced by defense market participants within the country
Porter's Five Force analysis of Pakistani defense industry: analysis of the market characteristics by determining the bargaining power of suppliers, bargaining power of buyers, threat of substitution, intensity of rivalry, and barriers to entry
Import and Export Dynamics: analysis of prevalent trends in the country's imports and exports over the last five years
Market opportunities: details of the top five defense investment opportunities over the next 10 years
Competitive landscape and strategic insights: analysis of the competitive landscape of Pakistani defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis
Pakistan is one of the major non-NATO allies of the US and a significant partner with China in the area of defense and security equipment development. The internal instability caused by terrorist groups along with Pakistan's long standing territorial dispute with neighbor countries are major factors driving the year on year increase the Pakistani defense budget. Insurgencies in Balochistan and Khyber Pakhtunkhwa, rising terrorism and territorial dispute with India and Afghanistan are key issues which are expected to propel spending of government in defense sector.
Pakistan is expected to spend US$48.5 billion on defense over 2020-2024 to manage internal instability and bolster its defense capabilities with respect to India. The country's total defense budget, excluding US aid has increased at sluggish rate over 2015-2019, with a CAGR of 0.69%, the country invested US$7.6 billion in the defense sector in 2015, which further increased to US$7.8 billion in 2019. The defense budget of Pakistan decreased drastically from US$9.4 billion in 2018 to US$7.8 billion due to economic instability and turmoil which has resulted in depreciation of Pakistani currency against US dollar.
Between 2015 and 2019, Pakistan's average capital expenditure allocation was 36.8% of the total defense budget, while its revenue expenditure allocation was 63.2%. The country's military hardware upgrade strategies are expected to increase the average capital allocation to 37.8% over the forecast period. Pakistan's homeland security (HLS) expenditure, targeted towards the prevention of drug smuggling, human trafficking, robbery, corruption, and cyber-attacks, is on the increase due to the growing instances of criminal and illicit activities within the nation. HLS expenditure, valued at US$1.0 billion in 2019, grew from US$0.9 billion in 2015, at a CAGR of 2.68%.
Pakistan's domestic defense industry is able to fulfill the majority of the national requirements for low and mid-market technology defense systems, but is largely unable to supply technologically advanced defense systems. US was once biggest exporter of arms to the Pakistan however the rising tensions between these two countries has considerably affected the weapons sales. From 2014-2018 there is large reduction in the arms transfer between these two countries. However, the Pakistani export market is set to gradually grow over the forecast period, as the country begins to develop high quality indigenous defense systems.
One of the most attractive defense markets in South Asia, Pakistan is anticipated to invest US$48.6 billion cumulatively over the forecast period, compared to US$42.3 billion spent during 2015-2019. Expenditure is anticipated to focus more on the procurement of equipment to augment air defense capabilities, enhance the operational capabilities of the current fleet of naval vessels, and better communication and surveillance systems.
The share of capital expenditure as a percentage of overall defense expenditure is anticipated to rise from an average of 36.8% during 2015-2019 to 37.8% over the forecast period.
The Pakistani MoD is expected to invest in land based C4ISR, conventional diesel electric submarine, multirole aircraft, airborne C4ISR, missile defense system, attack helicopters, Main Battle Tanks (MBT), corvettes MRO, and frigates.
Karachi Shipyard & Engineering Works (KSEW)
Pakistan Aeronautical Complex (PAC)
Pakistan Ordnance Factories (POF)
Pakistan Space and Upper Atmosphere Research Commission (SUPARCO)
Heavy Industries Taxila (HIT)
The Heavy Mechanical Complex (HMC)
Surveillance and Target Unmanned Aircraft (SATUMA)
Chengdu Aircraft Industry Group
Turkish Aerospace Industries (TAI)
Key Topics Covered
2. Executive Summary
3. Market Attractiveness and Emerging Opportunities 3.1. Current Market Scenario 3.1.1. Primary threat perception 3.1.2. Military Doctrine & Strategy 3.1.3. Procurement Programs 3.1.4. Ongoing procurement programs 3.1.5. Future procurement programs 3.1.6. Top Procurement Programs by Value (US$ Million) 2019-2024 3.1.7. Geopolitical, Social and Economic Scenario 3.1.8. Political & Strategic Alliances 3.2. Defense Market Size Historical and Forecast 3.2.1. Pakistani annual defense expenditure to reach US$10.9 billion by 2024 3.2.2. Territorial disputes and the war against terrorism expected to drive defense expenditure 3.2.3. The country's defense expenditure as a percentage of GDP to increase over 2020-2024 3.3. Analysis of Defense Budget Allocation 3.3.1. Capital expenditure share to average 37.8% during the forecast period 3.3.2. Capital expenditure to record a CAGR of 6.43% over 2020-2024 3.3.3. Pakistan Defense Procurement Scenario 3.3.4. Budget allocation for the army to be highest over the forecast period 3.3.5. Defense expenditure allocation for the army expected to increase over the forecast period 3.3.6. Per capita defense expenditure expected to increase during the forecast period 3.3.7. Homeland Security Market Size and Forecast 3.3.8. Allocation for the police forms the major component of homeland security expenditure 3.3.9. Measures to curb organized crime and cyber-attacks will drive homeland security expenditure 3.4. Benchmarking with Key Global Markets 3.4.1. Pakistani defense expenditure expected to record a CAGR of 6.48% over 2020-2024 3.4.2. Pakistani defense expenditure is low compared to other Asian defense spenders 3.4.3. Pakistan's defense expenditure is anticipated to reach 2.4% of GDP in 2024 3.5. Market Opportunities: Key Trends and Growth Stimulators 3.5.1. Top 10 Defense Market Sectors by Value (US$ Million) - Projections over period 2019-2024 3.5.2. Fighter and multi-role aircraft 3.5.3. Frigates 3.5.4. Land-Based C4ISR
4. Defense Procurement Market Dynamics 4.1. Import Market Dynamics 4.1.1. Defense imports projected to increase over the forecast period 4.1.2. China and the US were the leading suppliers of arms to Pakistan during 2014-2018 4.1.3. Aircraft and armored vehicles accounted for the majority of defense imports between 2014 and 2018 4.2. Export Market Dynamics 4.2.1. DEPO expected to start defense exports
5. Industry Dynamics 5.1. Five Forces Analysis 5.1.1. Bargaining power of the supplier: low to medium 5.1.2. Bargaining power of the buyer: high 5.1.3. Barriers to entry: medium to high 5.1.4. Intensity of rivalry: low to medium 5.1.5. Threat of substitution: low to medium
6. Market Entry Strategy 6.1. Market Regulation 6.1.1. Defense procurements assigned to DGDP and DGMP 6.1.2. Pakistani government updated Offset Act for defense equipment procurements 6.2. Market Entry Route 6.2.1. Budgeting Process 6.2.2. Procurement Policy & Process 6.2.3. Foreign firms enter the Pakistani defense industry through Foreign Military Sales (FMS) 6.2.4. Collaborations and joint ventures - a viable market entry route 6.3. Key Challenges 6.3.1. Corruption in the Pakistani defense sector hinders its growth 6.3.2. Unstable political system coupled with internal instability discourages foreign participation 6.3.3. Economic crisis in Pakistan is expected to act as major restrain to the growth of defense industry over the forecast period
7. Competitive Landscape and Strategic Insights 7.1. Competitive Landscape Overview 7.1.1. Foreign suppliers manufacture defense systems overseas and deliver to Pakistan 7.1.2. Growing domestic defense industry is predominantly state run 7.2. Key Domestic Companies 7.3. Key Foreign Companies
8. Business Environment and Country Risk 8.1. Economic Performance