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Future of the Pakistani Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022

Published: Apr-2017 | Format: PDF | Strategic Defence Intelligence | Number of pages: 130 | Code: MRS - 127904

Future of the Pakistani Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022

Summary

The Future of the Pakistani Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022, published by Strategic Defence Intelligence, 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.

This report offers detailed analysis of the Pakistani defense industry with market size forecasts covering the next five years. This report will also analyze factors that influence demand for the industry, key market trends, and challenges faced by industry participants.

In particular, it provides an in-depth analysis of the following - 
- The Pakistani defense industry market size and drivers: detailed analysis of the Pakistani defense industry during 2018-2022, 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 the 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 the Pakistani defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis

Scope

- One of the most attractive defense markets in South Asia, Pakistan is expected to invest US$64.4 billion cumulatively over the forecast period, compared to US$38.3 billion spent between 2013 and 2016. The country’s defense expenditure is expected to focus more on the procurement of equipment to augment its air defense capabilities, enhancing operational capabilities of the current fleet of naval vessels, and communications and surveillance systems. Cumulative expenditure on the procurement of advanced military hardware is projected to be US$24.1 billion over the next five years.
- The capital expenditure allocation, which stood at an average of 13% during the historic period, is expected to decrease to an average of 6.6% during the forecast period. This is primarily due to the procurement of advanced defense equipment and focus on increasing the indigenous defense manufacturing capabilities.The country’s total defense budget increased significantly over 2013-2017, with a CAGR of 9.94%, the country invested US$6.3 billion in the defense sector in 2013, and increased it to US$9.1 billion in 2017. This trend is expected to continue during the forecast period, due to the government’s well-defined military procurements plans, in a bid to fight terrorist attacks. Moreover, the nation’s long-standing territorial dispute with India indicates that the Pakistani defense strategy will largely correspond with India’s expenditure and development programs. Key opportunities for equipment suppliers are expected in sectors such asfighters and multi-role aircraft, aviation MRO, frigates and submarines. Consequently, Pakistan’s capital expenditure share is expected to increase during the forecast period due to internal and external instability. Consequently, the share of capital expenditure as a percentage of overall defense expenditure is expected to increase from an average of 32.0% between 2011 and 2015 to 33.5% over the forecast period.
- The MoD is expected to invest in fighters and Multi-role aircraft, SSK-Diesel Electric Submarine, Aviation MRO and Main Battle Tanks.

Reasons to buy

- This report will give the user confidence to make the correct business decisions based on a detailed analysis of the Pakistani defense industry market trends for the coming five years
- The market opportunity section will inform the user about the various military requirements that are expected to generate revenues during the forecast period. The description includes technical specifications, recent orders, and the expected investment pattern by the country during the forecast period
- Detailed profiles of the top domestic and foreign defense manufacturers with information about their products, alliances, recent contract wins, and financial analysis wherever available. This will provide the user with a total competitive landscape of the sector
- A deep qualitative analysis of the Pakistani defense industry covering sections including demand drivers, Porter’s Five Forces Analysis,  Key Trends and Growth Stimulators, and latest industry contracts
Table of Contents
1. Introduction 9
1.1. What is this Report About? 9
1.2. Definitions 9
1.3. Summary Methodology 12
1.4. About Strategic Defence Intelligence 14
2. Executive Summary 15
3. Market Attractiveness and Emerging Opportunities 17
3.1. Current Market Scenario 18
3.1.1. Primary threat perception 18
3.1.2. Military Doctrine & Strategy 20
3.1.3. Military Fleet Size 22
3.1.4. Procurement Programs 27
3.1.5. Ongoing procurement programs 27
3.1.6. Future procurement programs 28
3.1.7. Social, Political and Economic Environment & Support for Defense Projects 29
3.1.8. Political & Strategic Alliances 30
3.2. Defense Market Size Historical and Forecast 31
3.2.1. Pakistani annual defense expenditure to reach US$15.8 billion by 2022 31
3.2.2. Annual US military aid to Pakistan boosts military spending 34
3.2.3. Territorial disputes and the war against terrorism expected to drive defense expenditure 36
3.2.4. The country’s defense expenditure as a percentage of GDP to increase over 2018-2022 37
3.3. Analysis of Defense Budget Allocation 39
3.3.1. Capital expenditure share to average 33.5% during the forecast period 39
3.3.2. Capital expenditure to increase at a CAGR of 12.15% over 2018-2022 41
3.3.3. Budget allocation for the army to be highest over the forecast period 43
3.3.4. Army expenditure to reach US$7.5 billion in 2022 45
3.3.5. Air force expenditure to cumulatively value US$13.7 billion over the forecast period 47
3.3.6. Naval expenditure is expected to reach US$1.8 billion by 2022 49
3.3.7. Per capita defense expenditure expected to increase during the forecast period 51
3.4. Homeland Security Market Size and Forecast 52
3.4.1. Allocation for the police forms the major component of homeland security expenditure 52
3.4.2. Measures to curb organized crime and cyber-attacks will drive homeland security expenditure 54
3.4.3. Pakistan is at a significant risk from external and internal threats 56
3.4.4. Pakistan is one of the most terror prone countries in the world 57
3.4.5. Pakistan has a terrorism index score of “8.6” 59
3.5. Benchmarking with Key Global Markets 60
3.5.1. Pakistani defense expenditure expected to increase at a CAGR of 11.63% over 2018-2022 60
3.5.2. Pakistani defense expenditure is low compared to other Asian defense spenders 62
3.5.3. Pakistan’s defense expenditure expected to reach 3% of GDP by 2022 63
3.6. Market Opportunities: Key Trends and Growth Stimulators 64
3.6.1. Fighter and Multi-role Aircraft 64
3.6.2. SSK-Diesel Electric Submarine 66
3.6.3. Aviation MRO 67
3.6.4. Main Battle Tank (MBT) 68
4. Defense Procurement Market Dynamics 69
4.1. Import Market Dynamics 70
4.1.1. Defense imports projected to increase over the forecast period 70
4.1.2. China and the US were the leading suppliers of arms to Pakistan during 2012-2016 71
4.1.3. Aircraft and armored vehicles accounted for the majority of defense imports between 2012 and    2016 72
4.2. Export Market Dynamics 73
4.2.1. DEPO expected to start defense exports 73
5. Industry Dynamics 74
5.1. Five Forces Analysis 74
5.1.1. Bargaining power of the supplier: low to medium 75
5.1.2. Bargaining power of the buyer: high 75
5.1.3. Barriers to entry: medium to high 75
5.1.4. Intensity of rivalry: low to medium 75
5.1.5. Threat of substitution: low to medium 75
6. Market Entry Strategy 76
6.1. Market Regulation 76
6.1.1. Defense procurements assigned to DGDP and DGMP 76
6.1.2. Pakistani government introduces new Offset Act for defense equipment procurements 78
6.2. Market Entry Route 80
6.2.1. Budgeting Process 80
6.2.2. Procurement Policy & Process 82
6.2.3. Foreign firms enter the Pakistani defense industry through Foreign Military Sales (FMS) 83
6.2.4. Collaborations and joint ventures - a viable market entry route 85
6.3. Key Challenges 86
6.3.1. Corruption in the Pakistani defense sector hinders its growth 86
6.3.2. An unstable political system coupled with internal instability discourages foreign participation 86
7. Competitive Landscape and Strategic Insights 87
7.1. Competitive Landscape Overview 87
7.1.1. Foreign suppliers manufacture defense systems overseas and deliver to Pakistan 87
7.1.2. Growing domestic defense industry is predominantly state run 88
7.2. Key Domestic Companies 89
7.2.1. Karachi Shipyard & Engineering Works: overview 89
7.2.2. Karachi Shipyard & Engineering Works: products and services 89
7.2.3. Karachi Shipyard & Engineering Works (KS&EW): recent announcements and strategic initiatives 90
7.2.4. Karachi Shipyard & Engineering Works: alliances 90
7.2.5. Karachi Shipyard & Engineering Works: recent contract wins 91
7.2.6. Pakistan Aeronautical Complex: overview 92
7.2.7. Pakistan Aeronautical Complex: products and services 92
7.2.8. Pakistan Aeronautical Complex: recent announcements and strategic initiatives 93
7.2.9. Pakistan Aeronautical Complex: alliances 93
7.2.10. Pakistan Aeronautical Complex: recent contract wins 94
7.2.11. Pakistan Ordnance Factories: overview 95
7.2.12. Pakistan Ordnance Factories: products and services 95
7.2.13. Pakistan Ordnance Factories: recent announcements and strategic initiatives 96
7.2.14. Pakistan Ordnance Factories: alliances 97
7.2.15. Pakistan Ordnance Factories: recent contract wins 97
7.2.16. Pakistan Space and Upper Atmosphere Research Commission: overview 98
7.2.17. Pakistan Space and Upper Atmosphere Research Commission: products and services 98
7.2.18. Pakistan Space and Upper Atmosphere Research Commission: recent announcements and strategic initiatives 99
7.2.19. Pakistan Space and Upper Atmosphere Research Commission: alliances 100
7.2.20. Pakistan Space and Upper Atmosphere Research Commission: recent contract wins 100
7.2.21. Heavy Industries Taxila: overview 101
7.2.22. Heavy Industries Taxila: products and services 101
7.2.23. Heavy Industries Taxila: recent announcements and strategic initiatives 102
7.2.24. Heavy Industries Taxila: alliances 102
7.2.25. Heavy Industries Taxila: recent contract wins 103
7.2.26. The Heavy Mechanical Complex: overview 104
7.2.27. The Heavy Mechanical Complex: products and services 104
7.2.28. The Heavy Mechanical Complex: recent announcements and strategic initiatives 104
7.2.29. The Heavy Mechanical Complex: alliances 105
7.2.30. SATUMA: overview 106
7.2.31. SATUMA: products and services 106
7.2.32. SATUMA: recent announcements and strategic initiatives 106
7.2.33. SATUMA: recent contract wins 106
7.3. Key Foreign Companies 107
7.3.1. Boeing: overview 107
7.3.2. Boeing: products and services 107
7.3.3. Boeing: recent announcements and strategic initiatives 108
7.3.4. Boeing: recent contract wins 108
7.3.5. Raytheon: overview 109
7.3.6. Raytheon: products and services 109
7.3.7. Raytheon: recent announcements and strategic initiatives 109
7.3.8. Raytheon: recent contract wins 109
7.3.9. Lockheed Martin: overview 110
7.3.10. Lockheed Martin: products and services 110
7.3.11. Lockheed Martin: recent announcements and strategic initiatives 110
7.3.12. Lockheed Martin: alliances 111
7.3.13. Lockheed Martin: recent contract wins 112
7.3.14. Chengdu Aircraft Industry Group: overview 113
7.3.15. Chengdu Aircraft Industry Group: products and services 113
7.3.16. Chengdu Aircraft Industry Group: recent announcements and strategic initiatives 113
7.3.17. Chengdu Aircraft Industry Group: alliances 114
7.3.18. Chengdu Aircraft Industry Group: recent contract wins 114
8. Business Environment and Country Risk 115
8.1. Economic Performance 115
8.1.1. GDP Per Capita 115
8.1.2. GDP, Current Prices 116
8.1.3. Exports of Goods & Services (LCU) 117
8.1.4. Imports of Goods & Services (LCU) 118
8.1.5. Local Currency Unit per US$ 119
8.1.6. Market Capitalization of Listed Companies US$ Billion 120
8.1.7. Market Capitalization of Listed Companies (% of GDP) 121
8.1.8. Government Cash Surplus/Deficit as % of GDP 122
8.1.9. Goods exports as % of GDP 123
8.1.10. Goods imports as % of GDP 124
8.1.11. Service Imports as % of GDP 125
8.1.12. Service Exports as % of GDP 126
8.1.13. Foreign Direct Investment 127
8.1.14. Net foreign direct investment as % of GDP 128
8.1.15. Mining, Manufacturing, Utilities Output 129
9. Appendix 130
9.1. About SDI 130
9.2. Disclaimer 130

                        
            

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