Armoured Vehicles India Market Report 2012 - 2022


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Armoured Vehicles India Market Report 2012 - 2022

  1. 1. IndianArmoured VehicleMarket 2012 - 2022
  2. 2. TABLE OF CONTENTSAbout the research…………………………………..…..............Capabilities and requirements…………………………............The Asia market in perspective………………….…................Appendix A……………………………….…………….………….Appendix B………………………………….……….……..……..About Defence IQ…………………………….….….…………….Armoured Vehicles India 2012…………………….……..…….. Page 2
  3. 3. ABOUT THE RESEARCHThis report will explore how the future of Asia’s armoured vehicle market is likely toevolve over the next decade. The report is based on a survey of 144 senior executivesand professionals within the armoured vehicle domain, which includes both commercialand military respondents. The analysis of the survey data has been supplemented withproprietary interviews and desktop research.The majority of survey respondents were from the commercial sector, accounting for69% of total responses. Military personnel form the remaining 31% (Figure 1), whichincludes ranking Colonels, Lieutenant Colonels, and Captains. Looking at the chartbelow, the United States had the highest representation in the survey (19%) followed bythe UK (13%). A significant number of respondents are based in Asia with India having 31%the highest proportion (12%) followed by Australia (8%) and Singapore (5%). OtherAsian countries represented include Indonesia, South Korea, Pakistan, the Philippines,Vietnam and Cambodia. 69% Figure 1: Breakdown of respondents by country and type USA UK India Australia Singapore Other Commercial Military Commercial Military 19% 31% 43% 13% 69% 12% 5% 8% Page 3
  4. 4. CAPABILITIES AND REQUIREMENTSCountering the IED threat is the most important armoured vehicle attribute for Asianrequirements according to survey respondents, with 54% revealing that blast protectionis “critical.”However, taking the top two responses together from Figure 2 (i.e. respondentsspecifying “critical” and “important”), protection from small arms ballistic attack isgenerally considered to be the main design requirement for 83% of respondents. Basedon this analysis, IED protection then dramatically falls into third place with 79% behindreliability in second, which 81% of participants specified as being “critical” or“important.”For a direct comparison on what respondents think India specifically will be seekingmost for their armoured vehicles please see Appendix A. Figure 2: Analysis of key armoured vehicle attributes in Asia Unimportant Necessary Important Critical Ballistic protection 13% 5% 40% 43% Blast protection / counter-IED 10% 11% 25% 54% Mission range 7% 36% 41% 15% Adaptability 12% 27% 36% 25% Mobility 6% 16% 42% 36% Transportability 7% 23% 48% 22% Cost (affordability) 8% 16% 33% 43% Reliability 8% 11% 39% 42% RPG protection 11% 14% 38% 37% Page 4
  5. 5. Figure 3: Global* analysis of key armoured vehicle requirements Unimportant Necessary Important Critical Cost (affordability) 9% 17% 42% 33% Reliability 8%5% 32% 55% Mobility 4% 19% 59% 18% Blast protection / counter-IED 7% 12% 4% 78% Ballistic protection 7% 12% 24% 57% *Taken from Armoured Vehicles 2012In Defence IQ’s Armoured Vehicles 2012 Report released earlier this year, 57% ofrespondents identified ballistic protection as a critical attribute (Figure 3), which issignificantly above the 43% looking specifically at the Asia region. There is a similarcontrast with blast protection – 78% in the global report compared with just 54% in thisone – although the IED threat will be explored in greater detail later in this report.This perception gap suggests Asian customers are less concerned with protection andinstead consider secondary or tertiary factors, such as cost and mobility, to be morerelevant than their counterparts in the West or those currently engaged in combat andcombat support missions.This is further evidenced when looking at the disparity with reliability, which with 55% ofrespondents identifying it as a critical attribute it’s 13% up on the 42% in the globalreport. Even more stark is mobility, which twice as many respondents thought to becritical for Asia (36%) compared to the global market (18%). Page 5
  6. 6. Why does the Asian market put less emphasis on the protection component ofarmoured vehicles and give more credence to a wider range of attributes than otherregions do?One answer could be that it has been some time since an Asian country was deeplycommitted to a war on foreign soil. Simply, if you’re not being shot at the need forballistic and blast protection understandably diminishes.Looking at Figure 4, however, the assumption that Asia compromises on protection issoon put into perspective when respondents were asked to prioritise armoured vehiclecapabilities. (For a direct comparison on what respondents think will be the mostimportant capability for India specifically please see Appendix B). Figure 4: The most important capability for Asian countries 19% 26% Mobility Survivability Reliability 55%Figure 4 highlights that survivability (55%) is more than twice as important as reliability(26%), and nearly three times that of mobility (19%).While this shows that, in accordance with Figures 2 and 3, protection, reliability andmobility respectively line up as key attributes, it is only when respondents are asked forthe key attribute that survivability is prioritised.When considering armoured vehicle capabilities, Asian customers and end users lookat a number of different options. However, when asked what the priority should be,protection is the obvious stand-out attribute. Page 6
  7. 7. The consensus leads to protection being the dominant design requirement for armouredvehicles over the next ten years. When thinking about the standard PerformanceTriangle for armoured vehicle engineers (seen below left), the focus on protectionneeds to be considered in the context of its high priority. It could be redesigned to looksimilar to the figure below: Figure 5: The Performance Triangle Standard Updated PROTECTION PROTECTION PERFORMANCE SURVIVABILITYWEIGHT COST WEIGHT COST Page 7
  8. 8. Confirming the data analysis in Figure 3, the graph below highlights that the IED isconsidered to be the most significant threat that Asian procurers of armoured vehiclesshould seek to protect against. A comfortable 18% margin sits between IED/blast (78%)and the next most potent threat, small arms ballistic attack (50%).That seems a fairly decisive result. However, compared to the response from the globalreport, the emphasis on IEDs is noticeably reduced; 95% of respondents identified IEDsas the key threat for global requirements, which is 17% more than for Asia alone.With NATO nations bogged down in Afghanistan where the IED threat has increased infrequency and lethality, the requirement for innovative counter-IED technologies hasbeen the primary driver for industry. The need to protect against IEDs is directlyproportional to the frequency with which a nation is likely to face the threat. In Asia, thatprospect is considerably lower than for the United States military for example.“Protection can be offset by mobility. It is themobility with which we can overcome theprotection requirements … we need to have lightarmoured vehicles with high power-to-weightratios and high mobility, which is the only way Ithink we can achieve better protection.”Brig. Gen. C.P. Mohanty,North Kivu Brigade Commander,MONUSCO Mission to the DRC, UnitedNations Page 8
  9. 9. Asian countries adhere closer to the judgment of Brig. Gen. Norbert Huber, Head of FireDevelopment Division at the Austrian MoD, who said at a recent industry conferencethat: “IEDs are important, but they are certainly not the only threat we should consider inthe future … We always try to win the last war without giving much consideration abouthow to win the next.”One survey respondent also said: “The Western emphasis on counter-IED protectionwill be largely irrelevant to Asian customers.”But how true is that?Lt. Gen. Michael Barbero, the Director of the U.S. DoD’s Joint IED Defeat Organisation(JIEDDO), recently declared that: “The IED will be the focal point for any futureconflicts.”Lt. Col. (Rtd.) Jim Storr, an independent defence analyst and specialist in the field ofmilitary strategy, agreed with Barbero: “Wherever we are going we are not going towards another Cold War … the futurethreat landscape will include IEDs.”We might find that the true answer lies somewhere in between. Jon Hawkes, SeniorAnalyst at IHS Janes DS Forecast, provides a satisfying interpretation:“As has been clear for a while now many countries which do not require significant IEDand mine protection are nonetheless purchasing equipment which has significantcapability in this area as they are very much ‘in fashion’ and a highly desired symbol ofbeing a modern military.” Page 9
  10. 10. With just 14% of respondents identifying CBRN (Chemical, Biological, Radiological andNuclear) as a threat in Figure 6, it’s clear that few within the industry are concernedabout the potential risk it poses to armoured vehicle personnel.Is this direction sensible? Or is this an area that needs to be addressed now inpreparation for the future threat landscape? Figure 6: Overview of the most significant threats 78% 60% 58% 46% 37% 14% 22% CBRN Small arms HMG ballistic Blast / ballistic Directed attack (up IEDs RPG attack energy to 7.62mm) Unfamiliar (STANAG systems and difficult Level IV attack terrain / and climate similar)The IED wasn’t considered to be a significant threat to the survivability of vehicles pre-Iraq and Afghanistan. It is always difficult to predict and prepare for the “next” threat. Inwhich case, shouldn’t we (armoured vehicle manufacturers, the military, governments)at least start think about the possibility of an upturn in offensive CBRN capabilities? Page 10
  11. 11. Lieutenant General Sir John Kiszely, Former Director of the UK Defence Academy andNational President of the Royal British Legion, certainly thinks so, calling chemicalwarfare the “hidden threat” of the future. He warned of the dangers of only acquiringequipment relevant for today’s battlefield:“Counter-insurgency is the flavour of the moment … (but we) have to focus on what isthe character and future of conflict,” Kiszely said at an industry conference in the UK inFebruary. “Unpredictability and uncertainty must be two of the major factors,” whenconsidering current requirements. Page 11
  12. 12. Looking at Figure 7, the majority of respondents (76%) believe armoured personnelcarriers (APC) will be in highest demand in Asia over the next ten years while lightarmoured vehicles closely follow (69%). Figure 7: Overview of most in-demand armoured vehicle for Asian requirementsArmoured personnel carrier Light armoured vehicle Reconnaissance vehicles Main battle tanksUnmanned ground vehicles 0% 20% 40% 60% 80%The interesting thing to note here again relates back to the global armoured vehiclesstudy conducted in January where this statistic was in the reverse. There, 69%identified the light armoured vehicle as the top vehicle with the APC following on 63%.The role reversal is indicative of the Asia-specific requirements. Less likely to be used ina combat situation, the real demand from the Asian armoured vehicle customer is forlogistic support.General Sir Peter Wall, Chief of the General Staff at the UK Ministry of Defence, said asmuch in a recent speech:“The role of the tank has shifted subtly ... (in the future) tanks will be used primarily insupport of troops.” Page 12
  13. 13. While only 27% of respondents thought Unmanned Ground Vehicles (UGVs) would bein demand over the next ten years, the fact that it’s only just behind the main battle tank(29%) demonstrates a substantial leap forward in technological advance and missionrelevance in itself. Ten years ago the main battle tank was still considered to be a highlyvalued and useful military asset; in contrast, unmanned vehicles were still thepipedreams of scientists. There is no doubt that UGVs will continue to develop at arapid rate and in another ten years time the demand for them will soar. “The IED will be the focal point for any future conflict.” Lt. Gen. Michael Barbero, Director, Joint IED Defeat Organisation, Office of the Secretary, U.S. DoD Page 13
  14. 14. THE ASIA MARKET IN PERSPECTIVEIndia is the heartbeat of the APAC region as it continues to invest in its defenceindustrial base and build a world-class military force. Looking at Figure 8, 70% ofrespondents agree that India is the number one target market for growth over the nextdecade, almost double that of its closest rival China on 41%. Figure 8: Analysis of Asian countries presenting greatest potential for growth over next 10 years 0% 10% 20% 30% 40% 50% 60% 70% 80% India China South Korea Australia Indonesia Pakistan Singapore Vietnam Malaysia Philippines North Korea Japan Sri Lanka New Zealand Bangladesh Page 14
  15. 15. In a recent address to delegates at an industry conference, Lt. Gen. (Rtd.) DalipBhardwaj, the former Director General of Mechanised Forces in the Indian Army, said:“In India, the aerospace and defence market is growing at an unprecedented rate and isemerging as a key participant in the Asia-Pacific region.”But India isn’t just the principal growth market in Asia; it is globally too. In January, 57%of respondents identified India as the top potential market in the world for growth inDefence IQ’s Armoured Vehicles 2012 report.In his 2012 New Year message, Indian Prime Minister Dr. Manmohan Singh, said: “OurArmy, our Navy and our Air Force require modernisation and upgradation of personneland systems. Ensuring this will remain my most important task as Prime Minister.”It’s little wonder India is viewed as such a captive market: Earlier this year StockholmInternational Peace Research Institute (SIPRI) announced that India was the worldslargest arms importer, receiving 9% of the volume of international arms transfers during2006–2010. At the time Siemon Wezeman of the SIPRI Arms Transfers Programmesaid:“Indian imports of major conventional weapons are driven by a range of factors. Themost often cited relate to rivalries with Pakistan and China as well as internal securitychallenges. As an importer, India is demanding offsets and transfers of technology toboost its own arms industry, and, in order to secure orders, major suppliers areagreeing to such demands.”“Against the complex nature of future threats andchallenges, in the elongated spectrum of conflict, theIndian Armed Forces are committed to delivering security.Strategic transformation based on a judicious mix of acapability and threat-based approach against thebackdrop of anticipated technology and fiscaldevelopment is exciting. The moment has arrived whenIndia is on the threshold of economic and technologicalsurge.”Lieutenant General J.P. Singh (Rtd.),Former Deputy Chief of Staff,Indian Army Page 15
  16. 16. “The global defence industry is now truly at aninflection point. It is moving East, towards China, theMiddle East, and to India. In India, the aerospaceand defence market is growing at an unprecedentedrate and is emerging as a key participant in theAsia-Pacific region. India’s defence forces are on amodernisation overdrive and are hence one of thelargest military spenders in the world.”Lt. Gen. (Rtd.) Dalip Bhardwaj, PVSM,VSM,Former Director General of Mechanised Forces,Indian Army Page 16
  17. 17. Singapore comes in a lowly seventh place which is perhaps surprising. The country hasa booming defence industry and a number of Singapore-based companies, such asSingapore Technologies Engineering and its land vehicle arm ST Kinetics, are playerson the world stage. For example, in 2008 the firm beat off competition from UK MoDdarling BAE Systems to win the £150 million contract to supply an all-terrain vehicle.The company’s Bronco armoured vehicle was renamed the Warthog by the British, whoordered over 100 under an Urgent Operational Requirement (UOR).At the time, Simon Cox, the Programme Manager at the UK MoD, explained how theSingapore firm had exceeded expectations.“We appreciate the close, flexible and constructive working relationship with STKinetics. They are a great company to work with and the Bronco has exceeded ourexpectations in terms of quality, capability and performance. We are delighted with theirproduct, attitude and the progress jointly made in a very short time indeed.” “Indian imports of major conventional weapons are driven by a range of factors. The most often cited relate to rivalries with Pakistan and China as well as internal security challenges. As an importer, India is demanding offsets and transfers of technology to boost its own arms industry, and, in order to secure orders, major suppliers are agreeing to such demands.” Siemon Wezeman, Senior Fellow, SIPRI Arms Transfers Programme Page 17
  18. 18. Where will Asian customers procure their armoured vehicles from over the next tenyears?According to the survey data (Figure 9), those that do not manufacture the vehiclesindigenously will predominantly acquire them from North America and Western Europewith nearly half of all respondents indicating these two regions would be targeted byAsia.41% of respondents think Asian countries will procure their armoured vehicles from theirown country over the next ten years. Is this truly the case? Or would a 20 yeartimeframe be more realistic?For example, India is known to be building up its infrastructure and has designs onbecoming a self-sufficient military power in the near future. However, analysts predictthat infighting, bureaucracy and corruption are currently blighting India’s efforts tobecome a self-sufficient defence behemoth and this is unlikely to change for at least thenext five years.Projects such as the $20 billion MMRCA (medium multi-role combat aircraft), for whichDassault’s Rafale has been preliminarily chosen, will spur foreign companies to sell toIndia, but what about investing in India?The Indian government restricts foreign investors from owning more than 26% of anycompany based in the country. It’s a much maligned law and one that many feel is indesperate need of a rethink if India is to rapidly develop its own defence industry andsecurity infrastructure. There is an increasingly vocal lobby calling for private sectorreform in India and the belief is if these problems can be resolved then India couldbecome the haven for investors it has long promised. At the moment, it is merelypromising to be one. Page 18
  19. 19. Figure 9: Analysis of which regions Asian countries will procure from over the next decade Own country (indigenous) 50% South America 40% East Europe 30% 20% Australasia 10% North America 0% Middle East Africa Other Asia West EuropeAfrica only resonated with 16% of respondents but the defence industry is developingapace in the region. In a recent interview with Defence IQ Ivor Ichikowitz, the founder ofSouth Africa’s Paramount Group, explained how his company is innovating within thedefence and aerospace industry and what it will take for Africa to be taken seriously asa military power.“My personal goal is to be able to grow a world-class, global defence and aerospacebusiness out of Africa,” said Ichikowitz. “I’m a great believer in the fact that no country orcontinent can emerge from a developing economy to a developed economy without astrong aerospace and defence industry. My goal is to prove that that’s possible.”One considerable step in achieving that goal will be taken towards the end of this yearwhen Paramount unveils its AHRLAC (Advanced High-performance ReconnaissanceLight Aircraft), a versatile unmanned aerial vehicle and the first aircraft to have beenentirely conceived and built in Africa. Page 19
  20. 20. Aside form North America and Europe, the Middle East was the other notable region,seen by 28% of respondents to be a viable armoured vehicle market. A number of firmsare gaining significant traction in the global marketplace, including the Streit Group, whohave recently opened a base in Pakistan to supply the Asian market after alreadyhaving an manufacturing site in Mumbai, India.“The UAE is a very well located country geographically … you have access to Asia,Africa, Europe and the other Middle East countries … you’re connected to all the world,”Guerman Goutorov, the Chairman of Streit Group, told Defence IQ in an exclusiveinterview.In April the firm opened the largest armoured vehicle manufacturing site in the world inRas Al Khaimah, UAE. At 1.4 million square feet and a cost of $21.8 million, thecompany looks well placed to supply demand in Asia. Page 20
  21. 21. When considering the supply and demand for armoured vehicles over the next decadethe global economic crisis must also be factored in.While the West continues to cite it as a ‘global’ crisis, many in the East think of it as the‘North Atlantic economic crisis’ as economies in the APAC region expand. Will theeconomic woe in the West affect procurement in the East?With defence budgets declining in North America and Europe, the Asian market is seenas the key region for armoured vehicle manufacturers and suppliers to expand into.BAE already has a Joint Venture with India-based Mahindra – called Defence LandSystems India – and now other primes and second tier vendors are swiftly followingsuit.What are the challenges for vendors looking to gain traction in Asia?The three key issues are understanding and awareness of the tenders available;overcoming bureaucratic issues and maintaining full transparency throughout theprocess; and, as is often the case, communication problems.To overcome these challenges perhaps the traditional approach will have to change.Rather than remaining armoured vehicle integrators and continuing to control theprocess from a base in the region, one respondent suggested that companies shouldbecome ‘Design Houses’ by supplying the Asian market with advice and transferringtheir IP to partners in the region. Page 21
  22. 22. APPENDIX AQUESTIONThinking specifically about India, in terms of the countrys key armoured vehicle requirementsover the next 10 years please rate the following attributes on a scale from 1 - 4 (1 =unimportant, 4 = critical). Unimportant Necessary Important Critical 0% 20% 40% 60% 80% 100% Ballistic protection 8% 10% 36% 46% Blast protection / counter-IED 10% 10% 25% 55% Mission range 11% 23% 48% 19% Adaptability 15% 26% 37% 22% Mobility 10% 8% 48% 34% Transportability 11% 29% 44% 16% Cost (affordability) 9% 18% 33% 40% Reliability 10% 12% 35% 43% RPG protection 13% 18% 37% 32% Page 22
  23. 23. APPENDIX BQUESTIONThinking specifically about India, which of the following is the most important armoured vehiclecapability over the next ten years? 16% 32% Mobility Survivability Reliability 52% Page 22
  24. 24. ABOUT DEFENCE IQDefence IQ is an authoritative news source for high quality and exclusive commentary andanalysis on global defence and military-related topics. Sourcing interviews and insights directlyfrom senior military and industry professionals on air defence, cyber warfare, armouredvehicles, naval defence, land defence and many more topics, Defence IQ is a unique multimediaplatform to discuss and learn about the latest developments within the defence sector.So join over 60,000 defence professionals to access all the exclusive video interviews, podcasts,articles and whitepapers that are available and updated on a daily basis.Join today for free by signing up on our website:www.DefenceIQ.comConnect with us through social media too, just follow the links below: Twitter LinkedIn Google+ Facebook Page 22
  25. 25. ARMOURED VEHICLES INDIA 2012 Page 23
  26. 26. DISCLAIMERThis report is provided for information purposes only. This report may not be reproduced,published or distributed by an recipient for any purpose. The company accepts no responsibilitywhatsoever for any direct or indirect losses arising from the use of this report or its contents.Images courtesy of U.S. DoD and Indian Army.About the author Andrew Elwell is the Editor-in-Chief of Defence IQ. He has previously worked as a survivability specialist for a provider of ballistic and blast armour systems. Andrew holds a BA in History and American Studies from the University of Nottingham. He can be reached on Connect with Andrew on LinkedIn Follow him on Twitter: DefenceIQ and @AJElwell Page 24