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Future of the Russian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2021

March 2016 | 146 pages | ID: F7B411546D5EN
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SUMMARY

The Russian defense market will be driven by anarms race in the region with focus on modernizing its military by procuring advanced defense systems, and enhancing its border security measures. In addition, the capital expenditure allocation is anticipated to average 57.8% of the total defense budget during 2017-2021 and defense equipment procurements are expected to be in the areas of C4ISR systems%li%space-based, land-based and airborne, transport aircraft, multi-role aircraft, and submarines.

KEY FINDINGS
  • During 2012-2016, Russian defense expenditure registered a growth rate of -3.46%, declining from US$59.9 billion in 2012 to US$52 billion in 2016
  • Military expenditure is anticipated to register a CAGR of 7.28% during 2017-2021, to value US$78.4 billion in 2021
  • The Russian Government's aversion to western defense technology imposes challenges for the Russian defense market
    • Demand for equipment is mainly expected to revolve around C4ISR systems%li%space-based, land-based and airborne, transport aircraft, multi-role aircraft, and submarines during 2017-2021
SYNOPSIS

Strategic Defence Intelligence's report - Future of the Russian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2021 offers detailed analysis of the industry with market size forecasts from 2017-2021. This report will also analyze factors that influence demand in the industry, key market trends, and challenges faced by industry participants. In particular, it provides an in-depth analysis of the following:
  • Defense industry market size and drivers: detailed analysis of the defense industry during 2017-2021, including highlights of the demand drivers and growth stimulators. 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 with respect to the army, navy, and air force. It also details the key challenges faced by defense market participants within the country
  • Porter's Five Force analysis of the defense industry: analysis of the market characteristics by determining the bargaining power of suppliers, 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 from 2016 to 2026
  • Competitive landscape and strategic insights: Including an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis
REASONS TO BUY
  • Identify and track the global defense market and make regional comparisons to effectively target new revenue streams
  • Understand the importance of being led by the defense ministries in the military procurement market and define your strategies with insight on what your customers really want by analyzing recent orders, technical specifications, and the country's expected investment pattern during 2017-2021
  • Make correct business decisions based on detailed analysis of the defense industry from 2017-2021,which includes the total competitive landscape of the sector with detailed profiles of the top domestic and foreign defense manufacturers along with information about their products, alliances, recent contract wins, and financial analysis
  • Determine prospective investment areas by gaining an in-depth understanding of the industry in terms of market opportunities
  • Channel resources by identifying various military requirements that are expected to generate revenues across different sectors during 2017-2021
1 INTRODUCTION

1.1 What is this Report About?
1.2 Definitions
  3.4.2 Russia is world's third largest defense spender
  3.4.3 Russia allocated 4.4% of its GDP to defense in 2016
  3.4.4 Russia is "highly affected" from acts of terrorism
3.5 Market Opportunities: Key Trends and Growth Stimulators
  3.5.1 Space-basedC4ISR
  3.5.2 Land-basedC4ISR
  3.5.3 Transport Aircraft
  3.5.4 Airborne-C4ISR
  3.5.5 Multi-role Aircraft
  3.5.6 Submarines

4 DEFENSE PROCUREMENT MARKET DYNAMICS

4.1 Import Market Dynamics
  4.1.1 The country's defense imports are low owing to a developed indigenous sector
  4.1.2 Ukraine was the key defense supplier to Russia
  4.1.3 Aircraft and engines were the key defense imports during 2011-2015
4.2 Export Market Dynamics
  4.2.1 Russia's exports witnessed a decline during 2011-2015
  4.2.2 India, China, and Vietnam are Russia's main defense equipment purchasers
  4.2.3 Aircraft and ships account for the majority of Russia's defense exports

5 INDUSTRY DYNAMICS

5.1 Five Forces Analysis
  5.1.1 Bargaining power of supplier: medium to high
  5.1.2 Bargaining power of buyer: high
  5.1.3 Barrier to entry: high
  5.1.4 Intensity of rivalry: high
  5.1.5 Threat of substitution: high

6 MARKET ENTRY STRATEGY

6.1 Market Regulation
  6.1.1 Entry into defense sector is highly regulated
  6.1.2 Market Entry Route
6.2 Key Challenges
  6.2.1 Russian Government's aversion to Western defense technology

7 COMPETITIVE LANDSCAPE AND STRATEGIC INSIGHTS

7.1 Competitive Landscape Overview
  7.1.1 Domestic industry in the process of consolidation for better focus and fund allocation
  7.1.2 Defense sector is dominated by domestic firms, with no foreign presence
7.2 Key Domestic Companies
  7.2.1 Sukhoi: overview
  7.2.2 Sukhoi: products
  7.2.3 Sukhoi: recent announcements and strategic initiatives
  7.2.4 Sukhoi: alliances
  7.2.5 Sukhoi: recent contract awards
  7.2.6 Splav - overview
  7.2.7 Splav - major products and services
  7.2.8 Tactical Missiles Corporation: overview
  7.2.9 Tactical Missiles Corporation - major products and services
  7.2.10 Tactical Missiles Corporation - recent announcements and strategic initiatives
  7.2.11 Tactical Missiles Corporation - recent contract wins
  7.2.12 Almaz-Antey - overview
  7.2.13 Almaz-Antey - Major Products and Services
  7.2.14 Almaz-Antey - recent announcements and strategic initiatives
  7.2.15 Almaz-Antey - alliances
  7.2.16 Almaz-Antey - recent contract wins
  7.2.17 United Aircraft Corporation - overview
  7.2.18 United Aircraft Corporation - major products and services
  7.2.19 United Aircraft Corporation - recent announcements and strategic initiatives
  7.2.20 United Aircraft Corporation - alliances
  7.2.21 KBP Instrument Design Bureau - overview
  7.2.22 KBP Instrument Design Bureau - major products and services
  7.2.23 KBP Instrument Design Bureau - recent announcements and strategic initiatives
  7.2.24 KBP Instrument Design Bureau - recent contract wins
  7.2.25 V.A.Degtyarev Plant - overview
  7.2.26 V.A.Degtyarev Plant - major products and services
  7.2.27 Kurganmashzavod - overview
  7.2.28 Kurganmashzavod - major products and services
  7.2.29 Kurganmashzavod - recent announcements and strategic initiatives
  7.2.30 Kurganmashzavod - alliances
  7.2.31 Kurganmashzavod - recent contract wins
  7.2.32 Uralvagonzavod - overview
  7.2.33 Uralvagonzavod - major products and services
  7.2.34 Uralvagonzavod - recent announcements and strategic initiatives
  7.2.35 Uralvagonzavod - alliances
  7.2.36 Uralvagonzavod - recent contract wins
  7.2.37 Izhevsk Mechanical Works - overview
  7.2.38 Izhevsk Mechanical Works - major products and services
  7.2.39 Izhevsk Mechanical Works - recent announcements and strategic initiatives
  7.2.40 Irkut Corporation - overview
  7.2.41 Irkut Corporation - major products and services
  7.2.42 Irkut Corporation - recent announcements and strategic initiatives
  7.2.43 Irkut Corporation - alliances
  7.2.44 Irkut Corporation - recent contract wins
  7.2.45 Irkut Corporation - financial analysis
  7.2.46 Oboronprom Corporation - overview
  7.2.47 Oboronprom Corporation - major products and services
  7.2.48 Oboronprom Corporation - recent announcements and strategic initiatives
  7.2.49 Oboronprom Corporation - alliances
  7.2.50 Oboronprom Corporation - recent contract wins

8 BUSINESS ENVIRONMENT AND COUNTRY RISK

8.1 Demographic and Social Stats
  8.1.1 Total Rural Population (In Mn)
  8.1.2 Total Urban Population (In Mn)
  8.1.3 Number of Households (In Mn)
8.2 Economic Performance
  8.2.1 GDP Per Capita, USD
  8.2.2 GDP (current USD Bn)
  8.2.3 Exports of goods and services (current USD Bn)
  8.2.4 Imports of goods and services (current USD Bn)
  8.2.5 Gross National disposable income (USD Bn)
  8.2.6 Manufacturing Output (USD Bn)
  8.2.7 Consumer price Index
  8.2.8 Wholesale Price Index
  8.2.9 LCU per USD (period average)
  8.2.10 LCU per EUR (period average)
  8.2.11 Lending Rate (%)
  8.2.12 Deposit Rate (%)
  8.2.13 Real Interest Rate (%)
  8.2.14 Market Capitalization of Listed Companies (USD Billion)
  8.2.15 Market Capitalization of Listed Companies (% of GDP)
  8.2.16 Total Government cash surplus/deficit (LCU Bn)
  8.2.17 Government cash surplus/deficit as % of GDP (LCU)
  8.2.18 Goods exports as a percentage of GDP
  8.2.19 Goods balance as a percentage of GDP
  8.2.20 Services imports as a percentage of GDP
  8.2.21 Services Exports as a percentage of GDP
  8.2.22 Foreign direct investment, net (BoP, current US$ Billion)
  8.2.23 Net Foreign direct investment as a percentage of GDP
  8.2.24 International reserves, including gold (USD Billion)
8.3 Energy and Utilities
  8.3.1 Total Conventional Thermal Electricity Net Generation (Billion Kilowatt hours)
  8.3.2 Hydroelectricity Net Generation (Billion Kilowatt hours)
  8.3.3 Nuclear Electricity Net Generation (Billion Kilowatt hours)
  8.3.4 Total Conventional Thermal Electricity Installed Capacity (Million Kilowatts)
  8.3.5 Total Electricity Exports (Billion Kilowatt hours)
  8.3.6 Total Electricity Imports (Billion Kilowatt hours)
  8.3.7 Proved Reserves of Natural Gas (Trillion Cubic Feet)
  8.3.8 Total Petroleum Consumption (Thousand Barrels Per Day)
  8.3.9 Crude Oil Proved Reserves (Billion Barrels)
  8.3.10 Total Non-Hydro Renewable Electricity Net Generation (Billion Kilowatts)
8.4 Infrastructure Quality and Availability
  8.4.1 Rail lines (total route - km)
  8.4.2 Air transport, freight (million ton-km)
  8.4.3 Overall construction (US$ Million)
8.5 Minerals
  8.5.1 Mining, Manufacturing, and Utilities Output (USD Bn)
8.6 Technology
  8.6.1 Research and development expenditure (Local Currency Thousands)
  8.6.2 Patents granted
8.7 Telecommunication
  8.7.1 Telephone lines (In Mn)
  8.7.2 Telephone Lines Penetration Rate (per 100 people)

9 APPENDIX

9.1 About SDI
9.2 Disclaimer

LIST OF TABLES

Table 1: Russian Defense Expenditure (US$ Billion), 2012-2016
Table 2: Russian Defense Expenditure (US$ Billion), 2017-2021
Table 3: Russian Defense Expenditure (RUB Billion), 2012-2016
Table 4: Russian Defense Expenditure (RUB Billion), 2017-2021
Table 5: Russian GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2012-2016
Table 6: Russian GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2017-2021
Table 7: Russian Defense Budget Split Between Capital and Revenue Expenditure (%), 2012-2016
Table 8: Russian Defense Budget Split Between Capital and Revenue Expenditure (%), 2017-2021
Table 9: Russian Capital Budget Allocation (US$ Billion), 2012-2016
Table 10: Russian Capital Budget Allocation (US$ Billion), 2017-2021
Table 11: Russian Capital Budget Allocation (RUB billion), 2012-2016
Table 12: Russian Capital Budget Allocation (RUB Billion), 2017-2021
Table 13: Russian Per Capita Defense Expenditure (US$), 2012-2016
Table 14: Russian Per Capita Defense Expenditure (US$), 2017-2021
Table 15: Russian Homeland Security Budget (US$ Billion), 2012-2016
Table 16: Russian Homeland Security Budget (US$ Billion), 2017-2021
Table 17: Russian Homeland Security Budget (RUB Billion), 2012-2016
Table 18: Russian Homeland Security Budget (RUB Billion), 2017-2021
Table 19: Benchmarking with Key Markets - 2012-2016vs. 2017-2021
Table 20: SDI Terrorism Index
Table 21: Sukhoi - Major Products and Services
Table 22: Sukhoi - Alliances
Table 23: Sukhoi - Recent Contract Wins
Table 24: Splav - Major Products and Services
Table 25: Tactical Missiles Corporation - Major Products and Services
Table 26: Tactical Missiles Corporation - Recent Contract Wins
Table 27: Almaz-Antey - Major Products and Services
Table 28: Almaz-Antey - Alliances
Table 29: Almaz-Antey - Recent Contract Wins
Table 30: United Aircraft Corporation - Major Products and Services
Table 31: United Aircraft Corporation - Alliances
Table 32: KBP Instrument Design Bureau - Major Products and Services
Table 33: KBP Instrument Design Bureau - recent contract wins
Table 34: V.A.Degtyarev Plant - Major Products and Services
Table 35: Kurganmashzavod - Major Products and Services
Table 36: Kurganmashzavod - Alliances
Table 37: Kurganmashzavod - Recent Contract Wins
Table 38: Uralvagonzavod - Major Products and Services
Table 39: Uralvagonzavod - Alliances
Table 40: Uralvagonzavod - Recent Contract Wins
Table 41: Izhevsk Mechanical Works - Major Products and Services
Table 42: Irkut Corporation - Major Products and Services
Table 43: Irkut Corporation - Alliances
Table 44: Irkut Corporation - Recent Contract Wins
Table 45: Oboronprom Corporation - Major Products and Services
Table 46: Oboronprom Corporation - Alliances
Table 47: Oboronprom Corporation - Recent Contract Wins

Threats from internal and external terrorist groups, the procurement of modern weapons for police personnel, and strengthening border security will be driving the country’s homeland security expenditure over the forecast period, according to Strategic Defense Intelligence’s new report – Future of the Russian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2019.

With the world’s fifth largest active army, Russia has embarked on a military modernization program as drafted in the State Armaments Program 2011-2020. As per the program, the Russian government is consistently increasing its expenditure on national defense, with an aim to upgrade 30% of the country’s arms and weapons by 2015 and 70% by 2020. Of the total budget for procurement over 2011–2020, about 80% will be spent on the purchase of arms, while only 10% is set aside for research and development, and 10% for the repair and upgrade of older equipment.

Russian Defense Expenditure, 2010-2014
Russian Defense Expenditure, 2010-2014 

This report provides in depth analysis of the Russian defense market, with identification of market drivers augmenting its provision of data on the current industry size and growth expectations to 2019. Together with its investigation of the industry structure and procurement dynamics, with analysis of the competitive landscape of the Bangladeshi defense industry, and its assessment of the business environment, Future of the Russian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2019 should be considered required reading for those serious about capitalizing on the significant opportunities it holds.

SDI Terrorism Heat Map
SDI Terrorism Heat Map 

Key insights include:

During the forecast period, Russia’s defense expenditure will be driven by the following factors:

Russia has the world’s longest border, with two thirds bound by water and the country sharing borders with 14 other countries. The country’s Border Guard Service officials execute the responsibility of protecting the national border, including preventing the illegal cross-border movement of people and goods through land and sea routes. The unit is also engaged in protecting the economic interests of Russia and its natural resources.

The country holds the world's largest natural gas reserves, second largest coal reserves, and eighth largest oil reserves. In order to enhance its homeland security, the Russian government intends to replace outdated protective installations such as barbed wire fences with advanced surveillance and monitoring equipment. Measures are being taken to bring in radars, laser control systems, UAVs, CCTV cameras, night vision equipment, and other automatic information collection devices to strengthen the border security. The Federal Security Service Board (FSB), the agency responsible for internal and border security, counter-terrorism, and surveillance, is planning to utilize ground effect vehicles (GEVs) for border control purposes as well as replace the old ageing vehicles used by the border guards by advanced four-wheelers and snowmobiles.

During 2008-2012, Russia was the world’s second largest arms exporter behind the US. The low cost arms produced by the country and large amount of credit offered to countries such as Venezuela, increased arms sales over the review period, with India and China accounting for the highest share of defense exports. Of the respondents from Europe who participated in the SDI Business Outlook Survey 2012, 61% cite ‘Asia’ as the region having the maximum defense opportunities in the next five years.



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