India Defence & Security Report

Providing expert analysis, independent forecasts and competitive intelligence on the defence & security industry.

Report includes: BMI Industry View, Industry SWOT Analysis, Industry Forecasts, BMI's Security Risk Reward Index, Company Profiles and Global, Regional and Country Industry Overviews.

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India Defence & Security Report
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BMI View: India is one of the biggest defence spenders globally. The country has one of the world's largest armed forces - much of which requires modernisation - and faces a range of external and internal security threats that drive investment into military personnel and equipment including terrorism, insurgencies, tensions with neighbouring Pakistan, and China's growing assertion in the region. India remains reliant on imports to meet much of its armed forces' requirements for technologically advanced equipment; however, amid efforts to develop and expand the local defence industry under Prime Minister Modi's 'Make in India' initiative, we expect the country's huge defence trade deficit to gradually narrow over the coming decade.

Headline Defence Expenditure Forecasts (India 2016-2020)
2016f 2017f 2018f 2019f 2020f
f = BMI forecast. Source: BMI, US Dept. Of State WMEAT
Defence expenditure, % of GDP 2.3 2.3 2.3 2.3 2.3
Defence expenditure, USDmn 51,737.7 56,161.4 61,357.2 67,322.7 73,693.4
Defence expenditure, USD, % y-o-y 6.2 8.6 9.3 9.7 9.5

Latest Updates

  • India's FY2016-17 budget proposal, announced in February 2016, amounts to INR2.49trn (USD36.6bn), a moderate y-o-y increase in local currency terms. Of the total, 52% of spending (excluding pensions) has been allocated to the army, while the air force will receive 33%, the navy 16%, and the Defence Research and Development Organisation (DRDO) 5%.

  • In April-December 2015, the Indian government reported a 39% y-o-y increase in defence exports to USD208mn.

  • According to figures from the Indian defence ministry reported by TASS, Indian contracts for Russian defence equipment exceeded USD5bn in the last three years (up to 2015), compared with USD4.4bn for the US.

  • As per the recently signed US-India defence cooperation agreement, the US is currently negotiating the transfer of 30-40 defence-related technologies to India.

  • BEL-Thales Systems Limited (BTSL) is jointly developing a fire-control radar, named Pharos, with Thales Netherlands as per an agreement signed in March 2016.

  • India and Russia resumed discussions to jointly develop a fifth generation fighter jet in February 2016.

  • The Indian MoD is working to modernise state-owned naval shipbuilders in order to enhance their productivity and speed up delivery of vessels. On March 8 2016, the ministry stated it had spent USD373mn on modernising four shipbuilders ( MDL, GRSE, GSL and HSL).

  • In January 2016, Israel Aerospace Industries (IAI) and Indian Premier Explosives signed an MoU to explore missile collaboration.

  • In February 2016, Israel's Rafael Advanced Defense Systems formed a JV with Bharat Forge (BFL) to jointly produce defence electronics and conduct military vehicle upgrades.

  • In March 2016, OIS Advanced Technology and France's SAMP entered a JV to produce advanced penetrator bombs and develop new munitions designs for the Indian armed forces.

  • Also in March, Swedish Saab signed an agreement with Tata Power Strategic Engineering Division (Tata Power SED) for collaboration on the manufacture of self-protection systems for land-based military platforms.

  • In the same month, India's Reliance Defence signed an agreement with Rafael on missile and air defence programme collaboration.

  • In April 2016, France's Sagem announced it had signed a JV agreement with OIS Advanced Technology for production of munition components.

  • In late-April 2016, Longbow LLC won a contract to supply India's armed forces with 12 fire control radar (FCR) systems for its Boeing AH-64E Apache attack helicopters.

  • In December 2015, Russia's Rostec announced that the Indian MoD had agreed to purchase at least 200 Ka-226T light multirole helicopters from Russian Helicopters. The units will be jointly produced in India by Russian Helicopters and HAL.

  • The US approved the Indian MoD's purchase of 145 BAE Systems lightweight howitzers for its army via the US Foreign Military Sales (FMS) programme in February 2016.

  • In early April 2016, Boeing and Lockheed Martin put forward new proposals to meet India's fighter jet requirement.

  • In March 2016, Tata Motors, Bharat Forge and US' General Dynamics Land Systems (GDLS) signed an agreement to jointly bid for India's USD15bn Future Infantry Combat Vehicle programme.

  • In early-May 2016, media reported that India's plans to procure five units of Russia's S-400 Triumf advanced air defence system had been postponed.

  • In April 2016, local media reported that the Indian navy was considering buying an additional three Scorpene diesel-electric submarines.

  • In March 2016, media reported that the Indian government was preparing the approval of USD3bn worth of defence equipment purchases from Israel.

  • In April 2016, BEL reported sales growth of 12% to INR75.1bn (USD1.1bn) for FY2015-16.

  • HAL announced in April that it plans to launch its initial public offering (IPO) before end-2016, having recently bought back shares from the state to progress with the listing.

  • According to management, HAL recorded a y-o-y turnover in 2015-2016 of USD2.48bn.

  • Over 2015 and Q116, several security officials were killed in a series of attacks by the Communist Party of India - Maoist (CPI-M) in Chhattisgarh.

  • In January 2016 a group of armed men attacked the Pathankot Air Force Station of the Indian Armed Forces. The attackers were suspected members of Pakistan-based Islamist terrorist group Jaish-e-Mohammed.

  • In early-May 2016, media reported that army chief General Dalbir Singh Suhag had ordered a study to 'right-size' the Indian army, aimed at reducing overall non-combat personnel to improve the tooth-to-tail ratio.

Defence Industry Risk Reward Index

India ranks highly in our Defence Industry Risk Reward Index for the Asia Pacific, due to its large defence budget and continued investment into military modernisation amid high security threats both from internal and external actors. As a result of the government's work to develop the local defence sector, we expect growth in Indian defence exports over the coming years, gradually improving India's standing in our RRI. At present, the country scores 58 out of 100 in our Index, ranking third regionally, behind China and Australia.

BMI Industry View
Table: Headline Defence Expenditure Forecasts (India 2016-2020)
Industry Forecast
Defence Expenditure
Table: Defence Expenditure (India 2014-2019)
Table: India (Defence Expenditure 2020-2025)
Defence Trade
Industry Risk Reward Index
Defence Industry Risk Reward Index
Table: Asia Pacific - Defence Industry Risk Reward Index
Market Overview
Defence Market Overview
Domestic Defence Sector
Domestic Defence Market
Armed Forces Overview
Armed Forces
Table: Armed Forces Personnel (India 2008-2013)
Table: Indian Armed Forces (IAF) - Overseas Deployments
Security Overview
Domestic Threats
Regional Threats
Company Profile
Bharat Dynamics (BDL)
Bharat Electronics (BEL)
Hindustan Aeronautics (HAL)
Honeywell International India
Ordnance Factories (OF)
Rolls-Royce International
Risk/Reward Index Methodology
Sector-Specific Methodology
Table: Defence Risk/Reward Index Indicators
Table: Weighting of Defence Risk Reward Index

The India Defence & Security Report features BMI Research's independent forecasts for national and international security, the defence industry, military expenditure, employment in arms production, and arms imports and exports, as well as examining industry trends and prospects, national and multinational arms producers and the regulatory environment.

BMI's India Defence & Security Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and regional competitive intelligence on the Indian defence and security industry.

Key Benefits

  • Benchmark BMI's independent defence and security industry forecasts on India to test other views - a key input for successful budgetary and strategic business planning in the Indian defence and security market.
  • Target business opportunities and risks in the Asia defence and security sector through reviews of latest industry trends, regulatory changes and major deals, projects and investments in Asia.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity).


Global and Regional Political Outlooks

A strategic overview of the world’s major political risks, identifying countries facing leadership successions and nations at risk of upheaval, inter-state conflict, or separatism and insurgencies, plus a summary of the world’s ‘wild card’ low-probability high-impact risks.

SWOT Analysis

Snapshot evaluation of the major issues affecting the defence and security sectors, economy and politics, with issues subdivided into strengths, weaknesses, opportunities and threats.

BMI Industry Forecast Scenario

Historic data series and forecasts to end-2019 for key industry indicators supported by explicit assumptions, plus analysis of key downside risks to the main forecast.

  • Defence Expenditure: Defence expenditure (local currency and USDbn); defence expenditure (% of total budget); defence expenditure per capita (USD); defence budget (local currency and USDbn).
  • Armed Forces (to 2012): Manpower available for military service, manpower fit for militaryservice, army personnel, navy personnel,air force personnel, total armed forces, (‘000) (% population).
  • Arms Trade: Arms and ammunition exports and imports (USDmn); bombs, grenades and missiles exports and imports (USDmn); revolver and pistol exports and imports (USDmn); weapons excluding guns and swords exports and imports (USDmn).

Political Risk Assessment

Drawing on BMI’s heritage of more than 25 years of Country Risk analysis, this comprehensively evaluates the key risks to domestic politics and foreign relations, focusing on issues most likely to affect either domestic security or the defence sector.

Security Risk Analysis

BMI’s proprietary Security Risk Indices provide investors with a reliable and country-comparable guide to conflict, terrorism and criminal risk, backed up by our analyst’s latest assessment of each component. Furthermore, drawing on our Country Risk expertise, we assess the state’s vulnerability to a serious, or prolonged, terrorist campaign.

Armed Forces Spending/ Expenditure

The reports contain a detailed breakdown of areas of expenditure by the armed forces, these include spending on international deployments, WMDs and missile defence systems as well as individual breakdowns of the cost-per-soldier.

Competitive Landscape

The domestic security overview lists the various potential internal security threats facing a country, ranging from internal security issues such as terrorism, cyber terrorism, crime and drugs, to external security issues including general defence procedures and potential threats from specific countries. The reports also provide a regional overview which details specific issues and flashpoints affecting the Americas, along with potential risks in the coming year.

Company Profiles*

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.


The Defence & Security Market reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.

*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.