Market Trends of Small Caliber Ammunition Industry
Military Segment To Witness Highest Growth During the Forecast Period
The growing threats due to terrorism, territorial conflicts, and geopolitical tensions have forced the countries to increase their defense spending. The growing defense budgets have facilitated the increasing investments in military modernization programs aimed at procuring better weapons to supplement or replace the existing weapons arsenal. The impact of military modernization on the ammunition market is being witnessed in countries like Germany, France, India, China, and Russia, which are spending significantly on enhancing the capabilities of their ground forces by inducting state-of-the-art small arms. The need to maintain a sufficient ammunition inventory with the militaries worldwide and the increasing demand for training ammunition is also anticipated to impact the small military caliber ammunition segment positively.
Also, several militaries have been involved in peacekeeping missions and counter-insurgency operations in foreign countries and require a continuous supply of ammunition to continue their operations. This has been one of the primary growth factors for the segment. Militaries are increasingly moving towards higher calibers like 7.62 mm projectiles, as the existing widely used calibers like the 5.56 mm are becoming ineffective in piercing the tougher armors.
Countries like the US and India are also developing firearms based on new calibers like the 6.8 mm ammunition, which are expected to witness higher demand in the years to come. For instance, In December 2021, India approved a major deal for manufacturing over 0.5 million AK-203 rifles in India. The rifles will be manufactured in India as part of the joint venture Indo-Russia Rifles Pvt Ltd (IRRPL). The Indian Army has a requirement for around 770,000 AK-203 rifles, of which 100,000 will be imported, and the rest will likely be manufactured in India, under a contract worth USD 674 million (INR 5,124 Crore). The Indian AK-203 will likely fire 7.62 x 39 mm ammunition, which is different from 7.6251 mm ammunition used by present-day AK-47 rifles of the Indian Army.
North America to Dominate Market Share During the Forecast Period
The US had around 750 bases in at least 80 countries worldwide as of July 2021. In addition to active combat, US personnel are typically deployed as part of several peacekeeping missions and military attachés or are part of the embassy, consulate security, and several other classified missions.
The enhanced capabilities of China and Russia on the battlefield forced the United States to increase its investments in advanced weapon systems and ammunition. Also, participation in NATO missions abroad generates significant demand for different types of ammunition. Such deployments have significantly contributed toward the growth of the procurement of arms and ammunition by the US armed forces. For instance, the US launched the Next Generation Squad Weapon (NGSW) program, aiming to replace the 5.56x45mm caliber M4 Carbine, M249 SAW (Squad Automatic Weapon), and 7.62x51mm caliber M240 machine guns with rifles that utilize a common 6.8mm caliber cartridge.
On the other hand, civilians in the US alone account for more than 45% of the worldwide total of civilian-held firearms. Government initiatives aimed at creating personal safety awareness programs drive the country's civilian small arms and ammunition demand. Programs like the Civilian Marksmanship Program promote firearm safety training and rifle practice for citizens, focusing on youth.
However, as gun-related violence in the country has increased over the past few years, the government has been making strict gun policies to regulate gun prefoliation. Similarly, The Canadian government announced its plan to increase its defense budget in 2022. Over the past couple of years, the defense spending in Canada has remained around USD 22 billion and has fallen short of the alliance’s target for its members to spend at least 2% of their GDP on defense.
