Market Trends of Air-based C4ISR Industry
Growth in the Global Defense Expenditure
Owing to profound changes in the international strategic landscape, the configuration of international security systems has been undermined by the growing hegemonism, unilateralism, and power politics, which fueled several ongoing global conflicts.
Uncertainties in territorial rights, political tensions, and the quest for universal dominance among the military powerhouses are among the major causes disturbing the geopolitical scenario. In this regard, the most common reaction of the governments is to increase their military spending, to improve security in their respective countries.
Despite the economic impact of the COVID-19 pandemic, global defense expenditure continued to increase in 2020 and 2021. According to SIPRI, the global military expenditure in 2021 rose to USD 2113 billion, an increase of 0.7% in from 2020. billion. Global spending in 2021 was 12% higher than in 2012. The five largest military spenders in 2021 were the United States, China, India, the United Kingdom, and Russia, which together accounted for 62% of world military spending.
As the threats for the countries become higher, enhancing the militaries' C4ISR capabilities becomes important for every country. In this regard, several military programs are currently underway to effectively upgrade the C4ISR capabilities of various countries. To facilitate these programs, countries are investing huge amounts into the enhancement of such capabilities, either through indigenous development or through procurement from global vendors. These investments are further driven by the growth in defense expenditures.
In recent years, countries in these regions have placed orders for newer generation platforms and equipment that incorporate C4ISR systems whereas several such development programs are also underway. These programs are expected to run during the forecast period.
The development and procurement of such platforms and equipment demands huge defense spending from the countries, as the cost of the systems is immense. Thus, the growth in defense spending is expected to drive the growth of the market in the coming years.
The Asia-Pacific region to Register Highest Growth During the Forecast Period
The Asia-Pacific region is expected to witness the highest growth rate as compared to the other regions, due to the presence of high military spending countries, such as China, India, and Japan. With the presence of geopolitical tensions in the land and sea borders in multiple countries, the procurement of C4ISR is likely to increase across the region. Forced modernization efforts across the Asia-Pacific region are also expected to increase the procurement of C4ISR systems. China and India are taking huge strides toward strengthening the capabilities of their armed forces and are among the top five defense-spending countries in the world.
The increasing technology and electronic warfare have been driving the demand for technologies to effectively tackle electronic warfare. In line with this, new developments have been occurring in the army, to keep up with global technology. For instance, In March 2022, the Defence Ministry of India signed a partnership with BEL to supply an Advanced Electronic Warfare suite for the Indian Air Force fighter jets. The contract was signed between the Ministry of Defense and Bharat Electronics Limited (BEL), with an estimated value of INR 1993 Crore.
In efforts to increase communications technology for military purposes, south Korea has been investing in upgrading its existing technologies. As a result, new contracts and partnerships have been observed, to cater to the demand for military-grade communications. For instance,
In September 2021, Hanwha Systems and LIG Nex1 have announced that they have secured contracts from South Korea's Defense Acquisition Program Administration (DAPA) linked to ANASIS-II, the country's first dedicated military communications satellite. Hanwha Systems stated that they was awarded a KRW360 billion (USD307 million) contract to both establish a network control system and manufacture portable ground terminals by 2024 linked to the ANASIS-II satellite system, which launched into space in July 2020.
Such developments are expected to drive the market towards significant growth rates during the forecast period.
