Arms and Ammunition Industry PDF

ARMS & AMMUNITION INDUSTRY
- Akash S. Nogaja (16CHE107)
Perspective and Conceptualization:
The modern arms industry has its roots in the latter half of the 19 th Century. As smaller
countries (and even newly industrializing countries like Russia and Japan) could no longer
produce cutting-edge military equipment with their indigenous resources and capacity, they
increasingly began to contract the manufacture of military equipment, such as battleships,
artillery pieces and rifles to foreign firms.
In 1854, the British government awarded a contract to the Elswick Ordnance Company of
industrialist William Armstrong for the supply of his latest breech loading rifled artillery
pieces. This galvanized the private sector into weapons production, with the surplus being
increasingly exported to foreign countries. Armstrong became one of the first international
arms dealers, selling his weapon systems to governments across the world from Brazil to Japan.
This industrial innovation in the defense industry was adopted by Prussia in 1866 & 1870-71
in its defeat of Austria and France respectively. By this time the machine gun had begun
entering into the militaries. In 1885, France decided to capitalize on this increasingly lucrative
form of trade and repealed its ban on weapon exports. The regulatory framework for the period
up to the First World War was characterized by a laissez-faire policy that placed little
obstruction in the way of weapons exports.
Due to the carnage of World War I, arms traders began to be regarded with odium as
"merchants of death" and were accused of having instigated and perpetuated the war in order
to maximize their profits from arms sales. An inquiry into these allegations in Britain failed to
find evidence to support them. However, the sea change in attitude about war more generally
meant that governments began to control and regulate the trade themselves.
The volume of the arms trade greatly increased during the 20th century, and it began to be used
as a political tool, especially during the Cold War where the United States and the USSR
supplied weapons to their proxies across the world, particularly third world countries.
Recent Startups and Forecasts:
Global research in the military sector has gained boost due to privatization in the ammunition
industry. Dozens of different technologies are being researched and brought into practice,
hence giving room for venturing into the industrial field of everything from humanoid robots
to bullets that are able to change path before reaching their target
Current militaries continue to invest in new technologies for the future. Such technologies
include cognitive radar, 5g cellular networks, microchips, semiconductors, and large scale
analytic engines.
Additionally, many militaries seek to improve current laser technology. For example, Israeli
Defense Forces utilize laser technology to disable small enemy machinery but seek to move to
more large scale capabilities in the coming years.
Militaries across the world continue to perform research on autonomous technologies which
allow for increased troop mobility or replacement of live soldiers. Autonomous vehicles and
robots are expected to play a role in future conflicts. This has the potential to decrease the loss
of life in future warfare.
Today's hybrid style of warfare also calls for investments in information technologies.
Increased reliance on computer systems has incentivized nations to push for increased efforts
at managing large scale networks and having access to large scale data.
New strategies of cyber and hybrid warfare include network attacks, media analysis, and media/
grass-roots campaigns on medias such as blog posts.
The defense sector has continued to rise in the past decade. Following the same trend, defense
expenditure is expected to grow between 3 and 4 percent in 2020 to reach an estimated US$1.9
trillion,1 as governments worldwide continue to modernize and recapitalize their militaries.
Most of the growth will likely be driven by increased defense spending in the United States, as
well as in other regions, such as China and India.
Demand for military equipment is on the rise as governments across the globe focus on military
modernization, given increasing global security concerns. The uncertainty and sustained
complexity of the international security environment worldwide is likely to boost global
defense spending over the next five years. Global defense spending is expected to grow at a
CAGR of about 3 percent over the 2019–2023 period to reach US$2.1 trillion by 2023.
Technology Intensiveness and Sourcing
a. Global Scenario
It estimates that the US now accounts for 34% of all global arms sales, up from 30% five years
ago, and are now at their highest level since the late 1990s. The US's arms exports are 58%
higher than those of Russia, the world's second-largest exporter. And while US arms exports
grew by 25% in 2013-17 compared with 2008-12, Russia's exports fell by 7.1% over the same
period. It is Middle East states that have been among the US's biggest customers - Saudi Arabia
tops the list - with the region as a whole accounting for almost half of US arms exports during
2013-17.
b. Indian Scenario
Despite having a modest internal defense industry, India is the largest arms importer in the
world, with most of its high-tech, high-value equipment such as aircraft, ships, submarines,
missiles, etc. coming in from Russia. 12% of worldwide arms exports (by value) reach India.
India domestically produces only 45% to 50% of defense products it uses, and the rest are
imported. India's military-industrial complex has had little success and only recently the private
sector was allowed to enter the defense production.
Economic Impact of Arms Industry on Developing Nations
An examination of Indian, Israeli and Brazilian arms production programs demonstrates that
complete self-sufficiency has so far been reached only for some less sophisticated weapon
systems. Other countries, less advanced than Brazil or India both in general industrialization
and in arms production, are even more dependent on foreign collaboration.
The major difficulty for developing countries to produce arms is a result of the design and
techniques of production of advanced weapon systems which reflect the economic conditions
and the political situation in industrialized countries. Heavy outlays in R & D constantly
produce technological obsolescence of military equipment, thus constantly accelerating the
demand for replacement schemes. Complex weapon systems call for highly qualified military
personnel, which in turn leads to drastically increased wage bills in modern armies. The high
proportion of 'labor costs' in military budgets further reinforces the technological 'escalation'
because a deliberate strategy is being developed to replace combatants whenever possible by
'capital'.
In the Third World, however, conditions differ from the industrialized nations particularly with
respect to labor costs: soldiers receive low wages, qualified personnel is scarce and training is
expensive and cannot be carried out quickly. As long as developing countries continue to
formulate military scenarios akin to those prescribed for the East-West conflict, they are also
bound to rely on the arms technology of industrialised countries, either imported as complete
weapons or as production technology. The result is that dependence on foreign cooperation has
not been reduced. The main economic point to make is a simple one: as a rule, domestic
production of arms does not reduce costs; on the contrary, an industrial pattern emerges that is
highly specialized and capital-intensive but not designed to meet the basic needs in a
developing country.

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ARMS & AMMUNITION INDUSTRY

- Akash S. Nogaja (16CHE107)

Perspective and Conceptualization:

Recent Startups and Forecasts:

Economic Impact of Arms Industry on Developing Nations

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