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Future of Pakistani Defense Industry – Market

Attractiveness, Competitive Landscape and

Forecasts to 2020

Future of the Pakistani Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2020

2

Summary

“Future of the Pakistani Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to

2020” report offers the reader detailed analysis of the defense budget over the next five years. Alongside it

offers insights into the market opportunities and entry strategies adopted by foreign OEMs (original

equipment manufacturers) to gain a market share in the Pakistani defense industry.

The report provides detailed analysis of the current industry size and growth expectations during 2016-2020,

including highlights of the key growth stimulators. It also benchmarks the industry against key global markets

and provides detailed understanding of emerging opportunities in specific areas.

Key Findings

Pakistan’s total defense budget increased significantly over 2011-2015, with a CAGR of XX%. The country

invested US$XX billion in the defense sector in 2011, and increased it to US$XX billion in 2015. 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 spending and development

programs. The Pakistani defense budget is projected to increase from US$XX billion in 2016, to US$XX

billion in 2020, at a CAGR of XX%. Pakistan is expected to allocate an average of XX% of its GDP to

defense expenditure over the forecast period, despite its relatively small economy. Per capita defense

expenditure is forecasted to increase from US$XX in 2015 to US$XX in 2020.

Key Features and Benefits

The report provides detailed analysis of the Pakistani defense industry during 2011–2020, including the

factors that influence the military expenditure. It provides detailed expectations of growth rates and projected

total expenditure.

It provides the manufacturers with insights on market opportunities along with industry structure and

dynamics prevalent in the country. In addition, the report focuses on the regulations governing the Pakistani

defense industry and the potential market entry strategies with an expert analysis of the competitive

structure.


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1. Market Attractiveness and Emerging Opportunities

1.1. Defense Market Size Historical and Forecast

1.1.1. Pakistani defense expenditure is expected to be US$XX billion over the forecast period

The Pakistani defense budget grew from US$XX billion in 2011 to US$XX billion in 2015, at a CAGR of XX%.

Territorial conflicts with neighboring countries and efforts to counter the increasing threat from terrorist groups

remain the prime commitment of the government, and it is working out a well-defined military hardware

procurement plan to support this aim. Between 2011 and 2015, the government added a range of advanced

equipment to its fleet; including JF-17 Block 1 jets, F-16C/D fighters, Saab 2000 Erieye aircraft, Shaanxi

ZDK-03 aircraft, Z-9C helicopters, Al-Zarrar and Al-Khalid armored vehicles, Zulfiquar class frigate, and

Azmat class patrol boats. With the procurement of advanced weapons expected to continue over the forecast

period, the defense expenditure is expected to reach US$XX billion by 2020, from US$XX billion in 2016, at a

CAGR of XX%.

The following table and figure show the Pakistani defense expenditure during the historic period:

Table 1: Pakistani Defense Expenditure, 2011-2015

Year Defense expenditure (US$ bn)

Defense growth percentage

2011

2012

2013

2014

2015

CAGR 2011-2015

Source: Ministry of Defense, Pakistan and SDI analysis © SDI

Figure 1: Pakistani Defense Expenditure, 2011-2015

Source: Ministry of Defense and SDI analysis © SDI

-20%

-15%

-10%

-5%

0%

5%

0

2

4

6

8

10

12

2011 2012 2013 2014 2015

Gro

wth

rate

(%)

Def

ense

exp

end

itur

e (U

S$

Bn

)

Defense Expenditure (US$ bn) Defense Expenditure Growth Rate


4

The following table and figure show projected defense expenditure of the Pakistan over the forecast period:

Table 2: Pakistani Defense Expenditure, 2016-2020

Year Defense expenditure (US$ bn)

Defense growth percentage

2016

2017

2018

2019

2020

CAGR 2016-2020


Figure 2: Pakistani Defense Expenditure, 2016-2020


-0.8%

-0.6%

-0.4%

-0.2%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

0

1

2

3

4

5

6

7

8

9

2016 2017 2018 2019 2020

Gro

wth

ra

te (

%)

De

fen

se

ex

pe

nd

itu

re (

US

$ B

n)

Defense Expenditure (US$ bn) Defense Expenditure Growth Rate


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1.2. Analysis of Defense Budget Allocation

1.2.1. Defense capital expenditure is expected to increase at a CAGR of XX% over the forecast period

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 XX% between 2011 and 2015 to XX% over the

forecast period. Major procurements expected during the forecast period include fighter jets, armored

vehicles, submarines, and naval ships. Research and development projects will also get a significant portion

of the country’s capital expenditure.

The following table and chart display Pakistan’s defense budget share of capital, revenue and other

expenditure during the historic period:

Table 3: Pakistani Defense Budget Split Between Capital and Revenue Expenditure (%),

2011–2015

Year Capital Expenditure Share Revenue Expenditure Share

2011

2012

2013

2014

2015


Figure 3: Pakistani Defense Budget Split Between Capital and Revenue Expenditure (%), 2011-2015


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2012 2013 2014 2015

Defe

nse B

ud

get

Sp

lit

(%)

Capital expenditure (%) Revenue expenditure (%)


6

The following table and chart display Pakistani defense budget share of capital and revenue expenditure

over the forecast period:

Table 4: Pakistani Defense Budget Split Between Capital and Revenue Expenditure (%),

2016–2020

Year Capital Expenditure Share Revenue Expenditure Share

2016

2017

2018

2019

2020


Figure 4: Pakistani Defense Budget Split Between Capital, Revenue and Other Expenditure (%),

2016-2020


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2016 2017 2018 2019 2020

Defe

nse B

ud

get

Sp

lit

(%)

Capital expenditure (%) Revenue expenditure (%)


7

2. Industry Dynamics - Porter’s Five Forces Analysis

Figure 4: Industry Dynamics – Porter’s Five Forces Analysis

Source: SDI analysis © SDI

Intensity of Rivalry Bargaining Power of Supplier

Bargaining Power of Buyer

Barrier to Entry

Threat of Substitute


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Report Methodology

SDI’s dedicated research and analysis teams consist of experienced professionals with a background in

industry research and consulting in the defense sector. The following research methodology is followed for all

databases and reports:

Secondary Research

The research process begins with exhaustive secondary research to source reliable qualitative and

quantitative information related to the defense market. The secondary research sources that are typically

referred to include, but are not limited to:

Industry associations

National government documents and statistical databases

Company websites, annual reports, financial reports, broker reports, investor presentations

Industry trade journals and other literature

Internal and external proprietary databases

News articles, press releases, and webcasts specific to the companies operating in the market

Primary Research

SDI conducts hundreds of primary interviews a year with industry participants and commentators in order to

validate its data and analysis. A typical research interview fulfills the following functions:

Provides first-hand information on market size, market trends, growth trends, competitive landscape,

and future outlook

Helps to validate and strengthen secondary research findings

Further develops the analysis team’s expertise and market understanding

Primary research involves e-mail interactions, telephone interviews, and face-to-face interviews for

each market category, division, and sub-division across geographies

The participants who typically take part in such a process include, but are not limited to:

Industry participants: CEOs, VPs, business development managers, market intelligence managers,

and national sales managers

External experts: investment bankers, valuation experts, research analysts, and key opinion leaders

specializing in defense markets

Conventions

Currency conversions are performed on the basis of average annual conversion rate format

calculations

All the values in tables, with the exception of compounded annual growth rate (CAGR) and

compounded annual rate of change (CARC), are displayed to one decimal place; therefore, due to

this rounding method, growth rates may appear inconsistent with absolute values

The forecasted values are projected on the basis of nominal values; the inflation was not taken into account


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TABLE OF CONTENTS

1. Introduction ......................................................................................................................... 11

1.1. What is this Report About? ..........................................................................................................11

1.2. Definitions .....................................................................................................................................11

1.3. Summary Methodology .................................................................................................................13

1.4. SDI Terrorism Index ......................................................................................................................14

1.5. About Strategic Defence Intelligence ..........................................................................................14

2. Executive Summary ............................................................................................................ 15

3. Market Attractiveness and Emerging Opportunities ........................................................ 17

3.1. Defense Market Size Historical and Forecast..............................................................................18

3.1.1. Pakistani annual defense expenditure to reach US$XX billion by 2020 .................................................. 18

3.1.2. Territorial disputes and the war against terrorism expected to drive defense expenditure ...................... 23

3.1.3. The country’s defense expenditure as a percentage of GDP to increase over 2016–2020 ..................... 24

3.2. Analysis of Defense Budget Allocation .......................................................................................26

3.2.1. Capital expenditure share to average XX% during the forecast period ................................................... 26

3.2.2. Budget allocation for the army to be highest over the forecast period ..................................................... 28

3.2.3. Army expenditure to grow at a CAGR of XX% over the forecast period to reach US$XX billion in 2020 .... 30

3.2.4. Air force expenditure to cumulatively value US$XX billion over the forecast period ................................ 34

3.2.5. Naval expenditure is expected to reach US$XX billion by 2020 .............................................................. 38

3.2.6. Per capita defense expenditure expected to increase during the forecast period ................................... 42

3.3. Homeland Security Market Size and Forecast ............................................................................44

3.3.1. Allocation for the police forms the major component of homeland security expenditure ......................... 44

3.3.2. Measures to curb organized crime and cyber-attacks will drive homeland security expenditure ............ 48

3.3.3. Pakistan is at a significant risk from external and internal threats ........................................................... 50

3.4. Benchmarking with Key Global Markets .....................................................................................51

3.4.1. Pakistani defense expenditure expected to increase at a CAGR of XX% over 2016–2020 .................... 51

3.4.2. Pakistani defense expenditure is low compared to other Asian defense spenders ................................. 53

3.4.3. Pakistan’s defense expenditure expected to reach XX% of GDP by 2020 .............................................. 54

3.4.4. Pakistan is one of the most terror prone countries in the world ............................................................... 55

3.5. Market Opportunities: Key Trends and Growth Stimulators ......................................................58

3.5.1. Fighter and Multi-role Aircraft ................................................................................................................... 58

3.5.2. SSK-Diesel Electric Submarine ................................................................................................................ 59

3.5.3. Aviation MRO ............................................................................................................................................ 60

3.5.4. Main Battle Tank (MBT) ............................................................................................................................ 61

4. Defense Procurement Market Dynamics ........................................................................... 62

4.1. Import Market Dynamics ...............................................................................................................63


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4.1.1. Defense imports projected to increase over the forecast period .............................................................. 63

4.1.2. Pakistan and the US were the leading suppliers of arms to Pakistan during 2010–2014 ........................ 64

4.1.3. Aircraft and armored vehicles accounted for the majority of defense imports between 2010 and 2014 . 65

4.2. Export Market Dynamics ..............................................................................................................66

4.2.1. DEPO expected to start defense exports ................................................................................................. 66

5. Industry Dynamics .............................................................................................................. 67

5.1. Five Forces Analysis.....................................................................................................................67

5.1.1. Bargaining power of the supplier: low to medium ..................................................................................... 68

5.1.2. Bargaining power of the buyer: high ......................................................................................................... 68

5.1.3. Barriers to entry: medium to high ............................................................................................................. 68

5.1.4. Intensity of rivalry: low to medium ............................................................................................................ 68

5.1.5. Threat of substitution: low to medium ....................................................................................................... 68

6. Market Entry Strategy ......................................................................................................... 69

6.1. Market Regulation .........................................................................................................................69

6.1.1. Defense procurements assigned to DGDP and DGMP ........................................................................... 69

6.2. Market Entry Route .......................................................................................................................71

6.2.1. Foreign firms enter the Pakistani defense industry through Foreign Military Sales (FMS) ...................... 71

6.2.2. Collaborations and joint ventures – a viable market entry route .............................................................. 71

6.3. Key Challenges .............................................................................................................................72

6.3.1. Corruption in the Pakistani defense sector hinders its growth ................................................................. 72

6.3.2. An unstable political system coupled with internal instability discourages foreign participation .............. 72

7. Competitive Landscape and Strategic Insights ................................................................ 73

7.1. Competitive Landscape Overview ...............................................................................................73

7.1.1. Foreign suppliers manufacture defense systems overseas and deliver to Pakistan ............................... 73

7.1.2. Growing domestic defense industry is predominantly state run ............................................................... 73

7.2. Key Domestic Companies ............................................................................................................74

7.2.1. Karachi Shipyard & Engineering Works: overview ................................................................................... 74

7.2.2. Karachi Shipyard & Engineering Works: products and services .............................................................. 74

7.2.3. Karachi Shipyard & Engineering Works: recent announcements and strategic initiatives ....................... 76

7.2.4. Karachi Shipyard & Engineering Works: alliances ................................................................................... 76

7.2.5. Karachi Shipyard & Engineering Works: recent contract wins ................................................................. 76

7.2.6. Pakistan Aeronautical Complex: overview ............................................................................................... 77

7.2.7. Pakistan Aeronautical Complex: products and services .......................................................................... 77

7.2.8. Pakistan Aeronautical Complex: recent announcements and strategic initiatives ................................... 77

7.2.9. Pakistan Aeronautical Complex: alliances ................................................................................................ 78

7.2.10. Pakistan Aeronautical Complex: recent contract wins ............................................................................. 78

7.2.11. Pakistan Ordnance Factories: overview ................................................................................................... 79


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7.2.12. Pakistan Ordnance Factories: products and services .............................................................................. 79

7.2.13. Pakistan Ordnance Factories: recent announcements and strategic initiatives ....................................... 80

7.2.14. Pakistan Ordnance Factories: alliances ................................................................................................... 81

7.2.15. Pakistan Ordnance Factories: recent contract wins ................................................................................. 81

7.2.16. Pakistan Space and Upper Atmosphere Research Commission: overview ............................................. 82

7.2.17. Pakistan Space and Upper Atmosphere Research Commission: products and services ........................ 82

7.2.18. Pakistan Space and Upper Atmosphere Research Commission: recent announcements and strategic

initiatives ............................................................................................................................................................... 83

7.2.19. Pakistan Space and Upper Atmosphere Research Commission: alliances ............................................. 84

7.2.20. Pakistan Space and Upper Atmosphere Research Commission: recent contract wins ........................... 84

7.2.21. Heavy Industries Taxila: overview ............................................................................................................ 85

7.2.22. Heavy Industries Taxila: products and services ....................................................................................... 85

7.2.23. Heavy Industries Taxila: recent announcements and strategic initiatives ................................................ 86

7.2.24. Heavy Industries Taxila: alliances ............................................................................................................ 86

7.2.25. Heavy Industries Taxila: recent contract wins .......................................................................................... 87

7.2.26. The Heavy Mechanical Complex: overview .............................................................................................. 88

7.2.27. The Heavy Mechanical Complex: products and services ......................................................................... 88

7.2.28. The Heavy Mechanical Complex: recent announcements and strategic initiatives ................................. 88

7.2.29. The Heavy Mechanical Complex: alliances .............................................................................................. 89

7.2.30. SATUMA: overview ................................................................................................................................... 90

7.2.31. SATUMA: products and services .............................................................................................................. 90

7.2.32. SATUMA: recent announcements and strategic initiatives ...................................................................... 90

7.2.33. SATUMA: recent contract wins ................................................................................................................. 90

7.3. Key Foreign Companies ...............................................................................................................91

7.3.1. Boeing: overview ...................................................................................................................................... 91

7.3.2. Boeing: products and services ................................................................................................................. 91

7.3.3. Boeing: recent announcements and strategic initiatives .......................................................................... 91

7.3.4. Boeing: recent contract wins .................................................................................................................... 92

7.3.5. Raytheon: overview .................................................................................................................................. 93

7.3.6. Raytheon: products and services ............................................................................................................. 93

7.3.7. Raytheon: recent announcements and strategic initiatives ...................................................................... 93

7.3.8. Raytheon: recent contract wins ................................................................................................................ 93

7.3.9. Lockheed Martin: overview ....................................................................................................................... 94

7.3.10. Lockheed Martin: products and services .................................................................................................. 94

7.3.11. Lockheed Martin: recent announcements and strategic initiatives ........................................................... 94

7.3.12. Lockheed Martin: alliances ....................................................................................................................... 95

7.3.13. Lockheed Martin: recent contract wins ..................................................................................................... 96

7.3.14. Chengdu Aircraft Industry Group: overview.............................................................................................. 97


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7.3.15. Chengdu Aircraft Industry Group: products and services ......................................................................... 97

7.3.16. Chengdu Aircraft Industry Group: recent announcements and strategic initiatives ................................. 97

7.3.17. Chengdu Aircraft Industry Group: alliances .............................................................................................. 98

7.3.18. Chengdu Aircraft Industry Group: recent contract wins ............................................................................ 98

8. Business Environment and Country Risk ......................................................................... 99

8.1. Demographics & Social Statistics ................................................................................................99

8.1.1. Total Rural Population .............................................................................................................................. 99

8.1.2. Total Urban Population ........................................................................................................................... 100

8.1.3. Number of Households (In mn) .............................................................................................................. 101

8.2. Economic Performance .............................................................................................................. 102

8.2.1. GDP Per Capita ...................................................................................................................................... 102

8.2.2. GDP, Current Prices ............................................................................................................................... 103

8.2.3. Consumer Price Index ............................................................................................................................ 104

8.2.4. Local Currency Unit per US Dollar ......................................................................................................... 105

8.2.5. Local Currency Unit per Euro ................................................................................................................. 106

8.2.6. Market Capitalization of Listed Companies ............................................................................................ 107

8.2.7. Market Capitalization of Listed Companies (% of GDP) ......................................................................... 108

8.2.8. Government Cash Surplus/Deficit .......................................................................................................... 109

8.2.9. Government Cash Surplus/Deficit as % of GDP .................................................................................... 110

8.2.10. Goods exports as % of GDP .................................................................................................................. 111

8.2.11. Goods imports as % of GDP .................................................................................................................. 112

8.2.12. Goods Trade Surplus/Deficit as % of GDP............................................................................................. 113

8.2.13. Service Imports as % of GDP ................................................................................................................. 114

8.2.14. Service Exports as % of GDP ................................................................................................................. 115

8.2.15. Service Trade Surplus/Deficit as % of GDP ........................................................................................... 116

8.2.16. Foreign Direct Investment....................................................................................................................... 117

8.2.17. Net foreign direct investment as % of GDP ............................................................................................ 118

8.2.18. International reserves, including gold ..................................................................................................... 119

8.2.19. External Debt .......................................................................................................................................... 120

8.2.20. External debt as % of GDP ..................................................................................................................... 121

8.3. Energy and Utilities ..................................................................................................................... 122

8.3.1. Conventional Thermal Electricity Net Generation .................................................................................. 122

8.3.2. Hydroelectricity Net Generation .............................................................................................................. 123

8.3.3. Nuclear Electricity Net Generation ......................................................................................................... 124

8.3.4. Conventional Thermal Electricity Installed Capacity .............................................................................. 125

8.3.5. Proved Natural Gas Reserves ................................................................................................................ 126

8.3.6. Petroleum Consumption ......................................................................................................................... 127

8.3.7. Crude Oil Proved Reserves .................................................................................................................... 128


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8.4. Infrastructure ............................................................................................................................... 129

8.4.1. Rail Lines ................................................................................................................................................ 129

8.4.2. Air transport, freight ................................................................................................................................ 130

8.5. Minerals ....................................................................................................................................... 131

8.5.1. Mining, Manufacturing, Utilities Output ................................................................................................... 131

8.6. Technology .................................................................................................................................. 132

8.6.1. Patents Granted ...................................................................................................................................... 132

8.7. Telecommunication .................................................................................................................... 133

8.7.1. Telephone Lines ..................................................................................................................................... 133

8.7.2. Telephone Lines Penetration Rate ......................................................................................................... 134

9. Appendix ............................................................................................................................ 135

9.1. About SDI ..................................................................................................................................... 135

9.2. Disclaimer .................................................................................................................................... 135


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LIST OF FIGURES

Figure 1: Pakistani Defense Expenditure (US$ bn), 2011–2015 ......................................................................................................................... 19 Figure 2: Pakistani Defense Expenditure (US$ bn), 2016–2020 ......................................................................................................................... 20 Figure 3: Pakistani Defense Expenditure (in PKR Billion), 2011–2015 ................................................................................................................ 21 Figure 4: Pakistani Defense Expenditure (in PKR Billion), 2016–2020 ................................................................................................................ 22 Figure 5: Pakistani GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2011–2015 ......... 24 Figure 6: Pakistani GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2016–2020 ......... 25 Figure 7:Pakistani Defense Budget Split Between Capital and Revenue Expenditure (%), 2011–2015 ............................................................... 26 Figure 8: Pakistani Defense Budget Split Between Capital and Revenue Expenditure (%), 2016–2020 .............................................................. 27 Figure 9: Pakistani Defense Expenditure Breakdown (%), 2011–2015 ............................................................................................................... 28 Figure 10: Pakistani Defense Capital Expenditure Breakdown (%), 2016–2020 .................................................................................................. 29 Figure 11: Pakistani Defense Expenditure for Army (US$ billion), 2011–2015 .................................................................................................... 30 Figure 12: Pakistani Defense Expenditure for Army (US$ billion), 2016–2020 .................................................................................................... 31 Figure 13: Pakistani Defense Expenditure for Army (in PKR bn), 2011–2015 .................................................................................................... 32 Figure 14: Pakistani Defense Expenditure for Army (in PKR bn), 2016–2020 .................................................................................................... 33 Figure 15: Pakistani Defense Expenditure for Air Force (US$ billion), 2011–2015 .............................................................................................. 34 Figure 16: Pakistani Defense Expenditure for Air Force (US$ billion), 2016–2020 .............................................................................................. 35 Figure 17: Pakistani Defense Expenditure for Air Force (PKR billion), 2011–2015 .............................................................................................. 36 Figure 18: Pakistani Defense Expenditure for Air Force (PKR billion), 2016–2020 .............................................................................................. 37 Figure 19: Pakistani Defense Expenditure for the Navy (US$ billion), 2011–2015............................................................................................... 38 Figure 20: Pakistani Defense Expenditure for the Navy (US$ billion), 2016–2020............................................................................................... 39 Figure 21: Pakistani Defense Expenditure for the Navy (PKR billion), 2011–2015 .............................................................................................. 40 Figure 22: Pakistani Defense Expenditure for the Navy (PKR billion), 2016–2020 .............................................................................................. 41 Figure 23: Pakistani Per Capita Defense Expenditure (US$), 2011–2015 ........................................................................................................... 42 Figure 24: Pakistani Per Capita Defense Expenditure (US$), 2016–2020 ........................................................................................................... 43 Figure 25: Pakistani Homeland Security Budget (US$ Billion), 2011–2015 ......................................................................................................... 44 Figure 26: Pakistani Homeland Security Budget (US$ Billion), 2016–2020 ......................................................................................................... 45 Figure 27: Pakistani Homeland Security Budget (PKR billion), 2011–2015 ......................................................................................................... 46 Figure 28: Pakistani Homeland Security Budget (PKR billion), 2016–2020 ......................................................................................................... 47 Figure 29: SDI Terrorism Heat Map, 2015 .......................................................................................................................................................... 50 Figure 30: Benchmarking with Key Markets – 2011–2015 vs. 2016–2020 .......................................................................................................... 52 Figure 31: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2015 and 2020 ........................................................... 53 Figure 32: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2015 ..................................................................... 54 Figure 33: SDI Terrorism Index, 2015 ................................................................................................................................................................. 55 Figure 34: Fighter and Multi-role Aircraft Market Size (US$ Billion), 2015–2025 ................................................................................................. 58 Figure 35: SSK-Diesel Electric Submarine Market Size (US$ Million), 2015–2025.............................................................................................. 59 Figure 36: Aviation MRO Market Size (US$ Million), 2015–2025 ........................................................................................................................ 60 Figure 37: Main Battle Tank Market Size (US$ Million), 2014–2024.................................................................................................................... 61 Figure 38: Pakistani Defense Import Trend, 2010–2014 (TIV values) ................................................................................................................. 63 Figure 39: Pakistani Defense Imports by Country (%), 2010–2014 ..................................................................................................................... 64 Figure 40: Pakistani Defense Imports by Category (%), 2010–2014 ................................................................................................................... 65 Figure 41: Industry Dynamics Porter’s Five Forces Analysis ............................................................................................................................... 67 Figure 42: Pakistan’s Rural Population (In Millions), 2016–2025 ......................................................................................................................... 99 Figure 43: Pakistan’s Urban Population (In Millions), 2016–2025 ......................................................................................................................100 Figure 44: Pakistan’s Number of Households (In mn), 2008–2017.....................................................................................................................101 Figure 45: Pakistan’s GDP Per Capita, 2011–2020 ...........................................................................................................................................102 Figure 46: Pakistan’s GDP, Current Prices (In US$ Billions), 2011–2020 ..........................................................................................................103 Figure 47: Pakistan’s Consumer Price Index, 2008–2017 ..................................................................................................................................104 Figure 48: Local Currency per US$- Exchange Rate , 2008–2017 .....................................................................................................................105 Figure 49: Local Currency per Euro, 2008–2017 ...............................................................................................................................................106 Figure 50: Pakistan’s Market Capitalization of Listed Companies (US$ Billion), 2003–2012 ..............................................................................107 Figure 51: Pakistan’s Market Capitalization of Listed Companies (% of GDP), 2002–2011 ................................................................................108 Figure 52: Pakistan’s Government Cash Surplus/Deficit (LCU Billion), 2002–2011 ............................................................................................109 Figure 53: Pakistan’s Government Cash Surplus/Deficit as % of GDP, 2002–2011 ...........................................................................................110 Figure 54: Pakistan’s Goods Exports as % of GDP, 2002–2011 ........................................................................................................................111 Figure 55: Pakistan’s Goods Imports as % of GDP, 2002–2011 ........................................................................................................................112


15

Figure 56: Pakistan’s Goods Trade Surplus/Deficit as % of GDP, 2002–2011 ...................................................................................................113 Figure 57: Pakistan’s Service Imports as % of GDP, 2002–2011 .......................................................................................................................114 Figure 58: Pakistan’s Service Exports as % of GDP, 2002–2011 .......................................................................................................................115 Figure 59: Pakistan’s Service Trade Surplus/Deficit as % of GDP, 2002–2011 ..................................................................................................116 Figure 60: Pakistan’s Foreign Direct Investment (US$ Billion), 2002–2011 ........................................................................................................117 Figure 61: Pakistan’s Net foreign direct investment as % of GDP, 2002–2011 ...................................................................................................118 Figure 62: Pakistan’s International reserves, including gold (US$ Billion), 2002–2011 .......................................................................................119 Figure 63: Pakistan’s External Debt (US$ Billion),2001–2010 ............................................................................................................................120 Figure 64: Pakistan’s External Debt as % GDP, 2001–2010 ..............................................................................................................................121 Figure 65: Pakistan’s Conventional Thermal Electricity Net Generation (Billion Kilowatt hours), 2003–2011 ......................................................122 Figure 66: Pakistan’s Hydroelectricity Net Generation (Billion Kilowatt hours), 2002–2011 ................................................................................123 Figure 67: Pakistan’s Nuclear Electricity Net Generation (Billion Kilowatt hours), 2003–2012 ............................................................................124 Figure 68: Pakistan’s Conventional Thermal Electricity Installed Capacity (Million Kilowatt hours), 2001–2010 .................................................125 Figure 69: Pakistan’s Proved Natural Gas Reserves (Trillion Cubic Feet), 2004–2013 ......................................................................................126 Figure 70: Pakistan’s Petroleum Consumption (Thousand Barrels Per Day), 2003–2012 ..................................................................................127 Figure 71: Pakistan’s Crude Oil Distillation Capacity (Billion Barrels), 2004–2013 .............................................................................................128 Figure 72: Pakistan’s Rail Lines (kms), 2002–2011 ...........................................................................................................................................129 Figure 73: Pakistan’s Air transport freight (million ton-km), 2002–2011 ..............................................................................................................130 Figure 74: Pakistan’s Mining, Manufacturing, Utilities Output (USD Billion), 2002–2011 ....................................................................................131 Figure 75: Pakistan’s Patents Granted, 2003–2012 ...........................................................................................................................................132 Figure 76: Pakistan’s Telephone Lines (In Million), 2003–2012 .........................................................................................................................133 Figure 77: Pakistan’s Telephone Lines Penetration Rate (Per 100 People), 2003–2012 ....................................................................................134


16

LIST OF TABLES Table 1: Pakistani Defense Expenditure (US$ bn), 2011–2015 ........................................................................................................................... 19 Table 2: Pakistani Defense Expenditure (US$ bn), 2016–2020 ........................................................................................................................... 20 Table 3: Pakistani Defense Expenditure (in PKR Billion), 2011–2015 ................................................................................................................. 21 Table 4: Pakistani Defense Expenditure (in PKR Billion), 2016–2020 ................................................................................................................. 22 Table 5: Pakistani GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2011–2015 .......... 24 Table 6: Pakistani GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2016–2020 .......... 25 Table 7: Pakistani Defense Budget Split Between Capital and Revenue Expenditure (%), 2011–2015 ............................................................... 26 Table 8: Pakistani Defense Budget Split Between Capital and Revenue Expenditure (%), 2016–2020 ............................................................... 27 Table 9: Pakistani Defense Capital Expenditure Breakdown (%), 2011–2015 ..................................................................................................... 28 Table 10: Pakistani Defense Capital Expenditure Breakdown (%), 2016–2020 ................................................................................................... 29 Table 11: Pakistani Defense Expenditure for Army (US$ billion), 2011–2015 ..................................................................................................... 30 Table 12: Pakistani Defense Expenditure for Army (US$ billion), 2016–2020 ..................................................................................................... 31 Table 13: Pakistani Defense Expenditure for Army (in PKR bn), 2011–2015 ..................................................................................................... 32 Table 14: Pakistani Defense Expenditure for Army (in PKR bn), 2016–2020 ..................................................................................................... 33 Table 15: Pakistani Defense Expenditure for Air Force (US$ billion), 2011–2015 ............................................................................................... 34 Table 16: Pakistani Defense Expenditure for Air Force (US$ billion), 2016–2020 ............................................................................................... 35 Table 17: Pakistani Defense Expenditure for Air Force (PKR billion), 2011–2015 ............................................................................................... 36 Table 18: Pakistani Defense Expenditure for Air Force (PKR billion), 2016–2020 ............................................................................................... 37 Table 19: Pakistani Defense Expenditure for the Navy (US$ billion), 2011–2015 ................................................................................................ 38 Table 20: Pakistani Defense Expenditure for the Navy (US$ billion), 2016–2020 ................................................................................................ 39 Table 21: Pakistani Defense Expenditure for the Navy (PKR billion), 2011–2015 ............................................................................................... 40 Table 22: Pakistani Defense Expenditure for the Navy (PKR billion), 2016–2020 ............................................................................................... 41 Table 23: Pakistani Per Capita Defense Expenditure (US$), 2011–2015 ............................................................................................................ 42 Table 24: Pakistani Per Capita Defense Expenditure (US$), 2016–2020 ............................................................................................................ 43 Table 25: Pakistani Homeland Security Budget (US$ Billion), 2011–2015 .......................................................................................................... 44 Table 26: Pakistani Homeland Security Budget (US$ Billion), 2016–2020 .......................................................................................................... 45 Table 27: Pakistani Homeland Security Budget (PKR billion), 2011–2015 .......................................................................................................... 46 Table 28: Pakistani Homeland Security Budget (PKR billion), 2016–2020 .......................................................................................................... 47 Table 29: Benchmarking with Key Markets – 2011–2015 vs. 2016–2020............................................................................................................ 51 Table 30: SDI Terrorism Index ............................................................................................................................................................................ 56 Table 31: FMS route followed by Foreign Companies ......................................................................................................................................... 71 Table 32: Key Foreign Companies and Operations in the Pakistani Defense Industry ........................................................................................ 73 Table 33: Karachi Shipyard & Engineering Works – Product Focus .................................................................................................................... 74 Table 34: Karachi Shipyard & Engineering Works - Alliances ............................................................................................................................. 76 Table 35: Karachi Shipyard & Engineering Works - Recent Contract Wins ......................................................................................................... 76 Table 36: Pakistan Aeronautical Complex – Product Focus ................................................................................................................................ 77 Table 37: Pakistan Aeronautical Complex - Alliances ......................................................................................................................................... 78 Table 38: Pakistan Aeronautical Complex - Recent Contract Wins ..................................................................................................................... 78 Table 39: Pakistan Ordnance Factories – Product Focus ................................................................................................................................... 79 Table 40: Pakistan Ordnance Factories - Alliances ............................................................................................................................................. 81 Table 41: Pakistan Ordnance Factories – Recent Contract Wins ........................................................................................................................ 81 Table 42: Pakistan Space and Upper Atmosphere Research Commission – Product Focus ............................................................................... 82 Table 43: Pakistan Space and Upper Atmosphere Research Commission - Alliances ........................................................................................ 84 Table 44: Pakistan Space and Upper Atmosphere Research Commission – recent contract wins ...................................................................... 84 Table 45: Heavy Industries Taxila – product focus .............................................................................................................................................. 85 Table 46: Heavy Industries Taxila – alliances ..................................................................................................................................................... 86 Table 47: Heavy Industries Taxila – recent contract wins .................................................................................................................................... 87 Table 48: The Heavy Mechanical Complex – product focus ................................................................................................................................ 88 Table 49: The Heavy Mechanical Complex – alliances ....................................................................................................................................... 89 Table 50: SATUMA – product focus .................................................................................................................................................................... 90 Table 51: SATUMA – recent contract wins ......................................................................................................................................................... 90 Table 52: Boeing – Product Focus ...................................................................................................................................................................... 91 Table 53: Boeing – Recent Contract Wins .......................................................................................................................................................... 92 Table 54: Raytheon – Product Focus .................................................................................................................................................................. 93 Table 55: Raytheon – Recent Contract Wins ...................................................................................................................................................... 93 Table 56: Lockheed Martin – Product Focus ....................................................................................................................................................... 94


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Table 57: Lockheed Martin – alliances ................................................................................................................................................................ 95 Table 58: Lockheed Martin – Recent Contract Wins ........................................................................................................................................... 96 Table 59: Chengdu Aircraft Industry Group – Product Focus .............................................................................................................................. 97 Table 60: Chengdu Aircraft Industry Group - Alliances ....................................................................................................................................... 98 Table 61: Chengdu Aircraft Industry Group – Recent Contract Wins ................................................................................................................... 98

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