An increase in expenditure is projected to drive the Brazilian defence industry growth, according to a report by GlobalData.
Titled ‘Future of the Brazil Defence Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2022’, the report states that Brazil is heavily dependent on imports, including innovative defence technologies from the US and Europe to retain its military edge.
The country’s defence imports were the highest in 2012, with aircraft and armoured vehicles being the main imports and Germany and the US being the main suppliers.
The country’s domestic defence industry is in early development. Although it exported to less developed nations such as Indonesia, Afghanistan, Angola, Mauritania, Pakistan and Bolivia during the 1980s, competition from foreign original equipment manufacturers (OEM) led to closure of numerous Brazilian defence firms.
Low defence expenditure and delay in the closure of defence deals are the major challenges.
Brazil has now increased its defence expenditure to protect its oil-rich reserves. It has allocated a significant amount of funds towards the procurement of fighters under the fourth-generation FX-2 programme.
Brazil is also procuring naval vessels and has contracted French defence company DCNS to supply four diesel-electric-powered submarines based on the Scorpene model.
To promote the industry, Brazil has included technology transfer obligations in the majority of its arms imports deals. However, this requirement has become a deterrent for foreign OEMs entering the industry.