Threats from internal and external terrorist groups will be driving the country’s homeland security expenditure

Thursday 20 February 2014, Amsterdam

Threats from internal and external terrorist groups, the procurement of modern weapons for police personnel, and strengthening border security will be driving the country’s homeland security expenditure over the forecast period, according to the new report – Future of the Russian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2019

With the world’s fifth largest active army, Russia has embarked on a military modernization program as drafted in the State Armaments Program 2011-2020. As per the program, the Russian government is consistently increasing its expenditure on national defense, with an aim to upgrade 30% of the country’s arms and weapons by 2015
and 70% by 2020. Of the total budget for procurement over 2011–2020, about 80% will be spent on the purchase of arms, while only 10% is set aside for research and development, and 10% for the repair and upgrade of older equipment.

K e y insights include:

During the forecast period, Russia’s defense expenditure will be driven by the following factors:


Russia has the world’s longest border, with two thirds bound by water and the country sharing borders with 14 other countries. The country’s Border Guard Service officials execute the responsibility of protecting the national border, including preventing the illegal cross-border movement of people and goods through land and sea routes. The unit is also engaged in protecting the economic interests of Russia and its natural resources.

The country holds the world's largest natural gas reserves, second largest coal reserves, and eighth largest oil reserves. In order to enhance its homeland security, the Russian government intends to replace outdated protective installations such as barbed wire fences with advanced surveillance and monitoring equipment. Measures are being taken to bring in radars, laser control systems, UAVs, CCTV cameras, night vision equipment, and other automatic information collection devices to strengthen the border security. The Federal Security Service Board (FSB), the agency responsible for internal and border security, counter-terrorism, and surveillance, is planning to utilize ground effect vehicles (GEVs) for border control purposes as well as replace the old ageing vehicles used by the border guards by advanced four-wheelers and snowmobiles.

During 2008-2012, Russia was the world’s second largest arms exporter behind the US. The low cost arms produced by the country and large amount of credit offered to countries such as Venezuela, increased arms sales over the review period, with India and China accounting for the highest share of defense exports. Of the respondents from Europe who participated in the SDI Business Outlook Survey 2012, 61% cite ‘Asia’ as the region having the maximum defense opportunities in the next five years.