Air Defense Systems Market - Growth, Trends, and Forecasts (2022 - 2027)

The air defense systems market was valued USD 14.05 billion in 2021 and is expected to reach 21.41 billion in 2027, projecting a CAGR of 7.43% during the forecast period (2022-2027).

The Covid-19 pandemic has adversely impacted the global air defense market, a cut in the expense of research and development in air defense system has been observed which restrict the development of the system. Several countries had a massive impact on Covid-19 which limits government spending on defense projects. However, the restrictions and economy are getting back to normal which is likely to be an evident sign for the growth of air defense systems over the forecast period.

The nature of air-based warfare has changed in recent years with the advent of more lethal, agile, and untraceable threats having autonomous capabilities. As threats increase, the countries are compelled to safeguard their territories from potential adversaries at any cost, due to which, the emphasis has increased on enhancing the air defense capabilities.

The market is expected to grow, primarily due to the growth in air-based threats and the increasing defense expenditures that facilitate both procurement and R&D in newer technologies. However, this growth is subjective to several associative factors, such as allocation of funds, which can be adversely affected due to the projected onset of economic turndown, and various technical factors that may eventually lead to program delays and cancellations.

Key Market Trends

Missile Defense Segment to Dominate the Market During the Forecast Period

Missile defense systems are deployed by global forces to detect, track, and neutralize incoming hostile missiles. Such systems utilize a position-based guidance system to track and neutralize air-based and ground-based threats. These systems include target detection, identification of friend or foe (IFF), target monitoring, weapons launch, and guidance systems.

The development of advanced weapon systems has emerged as a threat to the assets of two or more rival countries, thereby driving the need for developing advanced countermeasures to detect, track, and neutralize the enemy's fire prior to a designated target strike. A single missile defense system is designed to counter a specific range of missiles effectively. A layered defense architecture is utilized to protect against several evolving threats, ranging from short-range cruise missiles to hypersonic and surface skimmers. Generally, these missile defense systems are integrated with various tracking and support systems depending on the targeting profile.

The race for military supremacy is bolstering the procurement of new missile defense systems by nations across the world. Since missiles are being increasingly inducted into the armoury of global armed forces due to their inherent ability to strike multiple distant targets. A similar procurement drive for missile defense systems has been initiated to safeguard military assets against incoming missiles from the ground, air, or naval enemy forces.

S-400 and Patriot defense systems are two popular missile defense systems that are being procured across the world. Moreover, countries are developing new missile defense technologies with extended range and better friend-foe detection systems to counter missile threats.

Under the Indian Ballistic Missile Defense Program, the Indian government is planning to deploy a multi-layered ballistic missile defense system in the coming years to protect the country from ballistic missile attacks. On this note, the country is procuring the S-400 systems, in addition to its indigenous Ashwin Advanced Air Defense (AAD) system, which is also a land-based air defense system.

Through the Missile Defense Agency (MDA), the United States is investing in its Aegis Ballistic Missile Defense System (Aegis BMD), which is developed for missile defense against short to intermediate-range ballistic missiles on warships. Currently, the system uses the Aegis Weapon System of Lockheed Martin and the Standard missile of the Raytheon Company. In 2021, MDA requested USD 1,805.1 million for research, development, testing, and evaluation (RDT&E).

The development and procurement of advanced missile defense systems is expected to drive the growth of the missile defense system during the forecast period.

Asia-Pacific to Experience the Highest Growth During the Forecast Period

The Asia-Pacific region is projected to register a highest CAGR during the forecast period. Growing territorial disputes in the region, coupled with the increase in the conflicts in the South China Sea, are some of the significant factors that have necessitated the importance of air defense in the region. Major defense exporters, like the United States, Russia, and Israel, are looking at Asia-Pacific as the region with the highest growth potential and are pitching their air defense systems to various countries in the region. Also, the United States and Russia are primarily concentrating on the region to increase their political influence in the Asia-Pacific region.

China is also expanding its military forces to tackle the border conflict with India, Japan and South Korea, from 2020. These moves sparked a large conflict with the countries in Asia-Pacific. In contrast, this country tested various high lethal missiles to neutralize the growing threat and increase its military capabilities. As part of an ambitious modernization program by President Xi Jinping, China increased research into a range of missiles, including sophisticated nuclear-tipped ballistic missiles and missiles that can destroy satellites in orbit. For instance, in August 2021, China tested a nuclear-capable hypersonic missile that circled the globe before speeding towards its target, illustrating an advanced capability.

According to the China Defense Ministry, the country conducted a land-based missile interception test in June 2022 that achieved its planned goal. The test was defensive and not directed against any specific country

Majority of India's need for military equipment arises from its border conflicts with neighbouring countries. China and Pakistan, along with Bangladesh, executed military actions to choke India from multiple directions. Furthermore, the on-ground military dispute at the Line of Actual Control (LAC) with China and a similar conflict with Pakistan necessitated the procurement of air defense systems for India. In December 2021, India received an S-400 air defense missile system worth nearly INR 35,000 crore, developed by Almaz Central Design Bureau of Russia, which boosted the country's air defense capabilities to help India tackle air threats from up to 400 km, deployed in Punjab by the Indian Air Force.

Growing procurements and development of air defense system due to increasing threats from neighbouring countries is likely to drive demand during the forecast period.

Competitive Landscape

Raytheon Company, Israel Aerospace Industries Ltd, Rheinmetall AG, Lockheed Martin Corporation, and Thales Group are some of the prominent players in the market. With the competition growing in the industry, innovation becomes the key for the players for standing out in the growing competition. The growth in stealth technology has increased the need for efficient detection of incoming aerial threats. This has propelled a significant amount of R&D investments in air defense technologies. Several major defense exporting countries are trying to sell their air defense systems to other countries that lack defense manufacturing capability. Indigenous manufacturing of the air defense systems is also kicking off, with several of the new, locally developed air defense systems about to come into operation during the forecast period.

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