Iran 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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Iran Defence & Security Report
Product Price
$1,295.00

BMI View: The removal of most sanctions against Iran facilitate s a return to economic growth; however, recovery will be slow, and Tehran's military spending will therefore remain modest on a regional comparison in the short- to medium- term . That said, demand for defence equipment will stay strong, as Iran continues to provide assistance to Shi'a groups across the region; seeks to narrow the gap to rival Saudi Arabia's more technologically advanced military; and invests in weapons systems to protect against a potential US/Israeli attack. Meanwhile, the government remains committed to achieving its go al of military self-sufficiency, and will likely seek offsets through any defence import deals over the coming decade. Externally, Russia and China appear best placed to capture large shares of the Iranian defence market over our forecast period to 2025, as arms embargoes still remain in place for Western suppliers.

Headline Defence Expenditure Forecasts (Iran 2015-2020)
2015e 2016f 2017f 2018f 2019f 2020f
e/f = BMI estimate/forecast. Source: BMI, US Dept. Of State WMEAT
Defence expenditure, % of GDP 3.6 3.6 3.6 3.6 3.7 3.7
Defence expenditure, USDmn 15,395.5 15,664.3 16,499.0 17,856.5 19,222.7 20,553.1
Defence expenditure, USD, % y-o-y -11.9 1.7 5.3 8.2 7.7 6.9

Latest Updates

  • Iran has ordered S-300PMU1/2 systems from Russia under a USD1bn contract, which after being cancelled in 2010, was reactivated following the signing of the nuclear deal in 2015. According to Russian media reports in December 2015, delivery is underway and will be completed by September 2016.

  • Iranian officials stated in February 2016 that the country was set to receive an undisclosed number of the latest-generation Sukhoi Su-30 combat aircraft. Washington announced in April 2016 that it would use its veto in the UN Security Council to block any such sale, but Moscow stated shortly after that no such veto could be applied. Under the current UN resolution on Iran, the UN's conventional arms ban against the country will remain in force for five years from October 2015 - or until the IAEA submits a report confirming Iranian compliance to the nuclear deal. Without such as report, Iran would not be able to receive the Su-30s before 2020.

  • Iran is reportedly interested in procuring Russian T-90 tanks - for which Moscow proposed a local license-build agreement in late-2015.

  • In April 2016, Iran deployed its regular army on its first overseas mission since the 1979 Islamic Revolution, in support of Syrian President Bashar al-Assad's forces.

  • Runoffs in Iran's parliamentary elections in late-April 2016 showed a significant swing towards the reformist camp, giving Rouhani's agenda and support for the nuclear deal a huge boost. The results put Rouhani in good stead ahead of the June 2017 presidential elections, where we expect him to be re-elected.

  • Attacks by extremist groups have taken place in Iran recent months; two Shi'a men were killed by militants who opened fire from a vehicle in Khuzestan in October 2015, and one policeman and three civilians died as an improvised explosive device (IED) detonated in Nik Shahr, Sistan-Baluchistan in December 9 2015. In November 2015, the IRGC reported that multiple IS-linked terrorist cells had been arrested in Kermanshae, close to the Iraqi border.

  • Riyadh's execution of prominent Shi'a cleric Nimr al-Nimr - which in turn sparked an attack on the Saudi embassy in Tehran - led to a severance of diplomatic ties between the two countries in January 2016. The Arab League's foreign ministers issued a statement in support of Saudi Arabia following the incident, warning that Iran would faced broader regional opposition if it continued to 'interfere' in internal affairs of Arab states.

  • In April 2016 Iran's ground forces unveiled a new tank, apparently based on a mix of older US (hull, engine) and Chinese (turret) designs. Also on display in April 2016 was the Bahman twin-cannon self-propelled wheeled air defence system developed by Iran's domestic defence industry.

  • Iran has announced it is working on a new battle tank named Karrar, which according to Tehran is wholly produced by local industry and is comparable in terms of features and capabilities to the Russian-manufactured T-90 model. According to Iranian army officials, the Karrar will be unveiled in May 2016.

  • In April 2016, Iran publically displayed the indigenously developed and manufactured Hamaseh UAV. Iranian authorities have described the UAV as a high-altitude, long-endurance (HALE) strike and intelligence, surveillance, and reconnaissance (ISR) platform; however, military experts claim it is more likely to belong in the tactical or medium-altitude, long-endurance (MALE) categories. Iran has also developed modernised version of its Shahed-129 UAV, displayed in an IRCG parade in February 2016. The new version has a new front section with a fairing similar to the US-manufactured General Atomics RQ-1 Predator.

  • According to Tasnim news, Navy Lieutenant Commander Admiral Gholam Reza Biqam stated in early-May 2016 that the Fateh submarine, developed by Iran Shipbuilding & Offshore Industries Complex, had been launched and is currently undergoing testing.

  • Iran's Sahand destroyer is about 80% complete according to Admiral Biqam quoted by Tasnim in early-May.

  • According to Tasnim in May 2016, Iran will launch serial production of its Bavar-373 long-range air defence system this year.

Defence Industry Risk Reward Index

Demand for defence equipment in Iran remains strong amid heightening tensions with Saudi Arabia, continued involvement external conflicts, rising terrorism threats, and difficult relations with Israel. Funding for new procurement remains restricted, but will gradually increase as the Iranian economy grows on the back of sanctions removal. Western companies will still be unable to participate in the Iranian defence industry and market over the coming years due to arms embargoes; however, Russia and China are likely to expand their presence in the country. Overall, we award Iran a score of 49 out of 100 in our Defence Industry Risk Reward Index, placing it seventh out of 15 countries in the MENA region.

BMI Industry View
7
Table: Headline Defence Expenditure Forecasts (Iran 2015-2020)
7
SWOT
10
Industry Forecast
12
Defence Expenditure
12
Table: Defence Expenditure (Iran 2014-2019)
13
Table: Defence Expenditure (Iran 2020-2025)
14
Defence Trade
15
Table: Iran - Bilateral Defence Agreements
17
Industry Risk Reward Index
19
Defence Industry Risk Reward Index
19
Table: Middle East and North Africa - Defence Industry Risk Reward Index
19
Rewards
20
Risks
20
Market Overview
22
Defence Market Overview
22
Domestic Defence Sector
22
Domestic Defence Market
25
Armed Forces Overview
27
Armed Forces
27
Table: Armed Forces Personnel (Iran 2008-2013)
28
Table: Manpower Available For Military Service (Iran 2016-2025)
28
Security Overview
30
Domestic Threats
30
Regional Threats
33
International Threats
37
Company Profile
38
China Great Wall Industry Corporation
38
Sukhoi
40
Ulan-Ude Aviation Plant
42
Aerospace Industries Organization
43
Ammunition & Metallurgy Industries Group
45
Defence Industries Organization
46
Iran Electronics Industries
48
Methodology
50
Industry Forecast Methodology
50
Risk/Reward Index Methodology
51
Sector-Specific Methodology
53
Table: Defence Risk/Reward Index Indicators
53
Weighting
54
Table: Weighting of Defence Risk Reward Index
54

The Iran 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 Iran Defence & Security Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and regional competitive intelligence on the Iranian defence and security industry.

Key Benefits

  • Benchmark BMI's independent defence and security industry forecasts on Iran to test other views - a key input for successful budgetary and strategic business planning in the Iranian 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).

Coverage

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.

Sources

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.