Aerospace and Defense Exporter Alert

Aerospace & Defense Exporter Alert

Each newsletter features a market of the month, important policy initiatives, industry programs, a trade show calendar and export statistics.

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Markets of the Month

Every other month, the Aerospace & Defense Exporter Alert highlights a new market with industry snapshots, updates and featured events.

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Market of the Month, Austria

The Austrian aviation, defense and space sectors offer ample opportunities for U.S. companies. The preferred way of conducting international business is through industrial cooperations.

Defense

AUSTRIA DEFENSE PROCUREMENT OPPORTUNITIES
U.S. firms in the defense industry are of high renown, and well-regarded for their innovative technologies, and after-sale service and training, making them competitive for exports in Austria’s growing defense market.

Background: Neutrality has been the foundation of Austria’s security and defense policy for many decades. In view of the changed geopolitical circumstances, mainly the ongoing armed conflicts in the Ukraine in the Gaza Strip, Austria is forced to rethink its security and defense strategy. As part of that, investments of 4.02 billion Euros by the Austrian Armed Forces are planned in 2024, with the goal of an annual budget of 6 billion by the year 2027.

Opportunity: The Austrian Armed Forces require a substantial increase in quality and quantity of land and air equipment and in the information environment. Budget increases have been allocated for that, as a measure of the long-term military renewal plan titled ÖBH2032+.

Some intended purchases include:

large investment allocations
10.3 million Euros for automotive vehicles
306.2 million Euros for armored vehicles
249.1 million Euros for weapons systems
195 million Euros for aviation (whereof 121,1 million for AW169 Leonardo helicopters and 35 million for the replacement of c-130 Hercules air transport system)
increase of material expenses by 8.8%
ammunition
clothing and gear

Wheeled tanks, helicopters, aircraft, as well as antiaircraft missiles, drones and drone defense are listed among required military equipment.

Aviation

U.S. aviation companies can find great partners in the well-developed Austrian aviation industry. The following aspects in particular might be of interest:

Highly Innovative (25% of revenue invested in R&D) sector in Austria: open to international collaborations.
Market Access: Austria’s central location in Europe, offers strategic access to other European markets.
Skilled Workforce: well-trained local workforce in aviation industry, which represents great value when cooperating with local partners.
Growth Potential: Austria’s aviation sector is growing at accelerated rates, opening the market for new business and transactions.

Today, Austrian companies in the aviation sector generate around EUR 3,14 billion in turnover annually. 75% of the companies are small and medium-sized, however, 20 of the companies have an annual turnover of over EUR 10 million. These firms operate as suppliers to major aircraft manufacturers and space agencies, while also working on innovating in areas like small aircraft and unmanned helicopters.

Currently, Austrian Aviation is aiming at achieving its 2040+ Strategy goals, i.e. climate-friendly and future-oriented aviation, meaning that objectives will include technological change implementations and creating sustainable fuels for air transport.

Space

The entire spectrum of space technology is present in Austria: from components for satellites and space vehicles to ground equipment and specialized measuring instruments. The Federal Ministry for Transport, Innovation and Technology (BMVIT) invests around EUR 70 million annually to support the space sector.

Upcoming Events

Airpower 24: September 6-7, 2024 in Styria, with an industry day on September 5
AIRPOWER24 6th – 7th Sept 24 – Die Flugshow in Zeltweg organisiert vom Österreichischen Bundesheer und Land Steiermark und Red Bull
ESA Industry Space Days, September 18-19, 2024 in the Netherlands
The Industry Space Days (ISD) connect SMEs, start-ups, and the broader space community for presentations, exploring business potential, exchanging ideas, and finding partners.
AUSA 2024 | Oct 14 - 16 | Washington DC (defenseadvancement.com) Official Austrian delegation attending
Aviation Forum Austria 2024 - open4aviation Oct 24, 2024 in Vienna

Contact Information

Andrea Wimpissinger, Commercial Specialist
International Trade Administration
U.S. Department of Commerce
U.S. Embassy Vienna
Cell: +43 676 968 5746; Email: andrea.wimpissinger@trade.gov

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Market of the Month, Japan

Executive Summary

Japan offers a lucrative market for imported aircraft, aircraft parts, and engines. U.S. firms have an overwhelming presence in the market due to long-standing relationships, some spanning over 70 years, with domestic manufacturers and trading firms. U.S. firms are presented with opportunities in the market as the domestic industry undertakes international projects, develops transport and patrol aircraft for defense, as well as small jet engines for civil aviation.

Commercial Aerospace

U.S. firms dominate Japan’s aerospace sector, benefiting from long-standing partnerships and increasing involvement of Japanese companies in international defense and civil aviation projects.

The resurgence in aircraft demand post-COVID-19 highlights a recovery in the aerospace sector, with a gradual increase in production for Boeing components by Japanese manufacturers such as Mitsubishi Heavy Industries, Kawasaki Heavy Industries, and Subaru. This recovery is supported by the U.S. FAA lifting the ban on Boeing 787 deliveries and a cautious approach to Boeing 777X program delays. In 2022, Japan imported $8.3 billion worth of aerospace products, with 59.6% coming from the U.S., and continues to offer duty-free importation on aircraft and parts under the WTO Agreement on Trade in Civil Aircraft.

Defense

Japan is increasing its defense budget in response to a challenging regional security landscape, underscored by North Korean missile advancements and China’s rising influence. The Cabinet approved a historic $55.9 billion budget for FY2024, marking a 16.5% increase from the prior year, to enhance capabilities across naval, land, and air dimensions, including the modification of Izumo-class carriers for F-35B operations, acquisition of new armored vehicles, and procurement of F-35A and F-35B fighter jets.

The budget focuses on advancing Japan’s defense technology research and development, with significant investments in stand-off defense, counter-hypersonic capabilities, and the Global Combat Air Program (GCAP) in collaboration with Italy and the UK.

Space

Japan’s space industry, renowned for its world-class industrial and technological prowess in R&D, is shifting its focus towards the commercialization of space technology, with concerted efforts from the Japanese government and industry to grow its space business. This pivot builds on a long-standing international collaboration in space development and exploration, initiated by a Japan-U.S. Joint Communique in 1969, and has seen Japan engaging in significant projects primarily led by NASA, with expectations for expanded collaboration in space exploration and science.

Recent developments have further strengthened space cooperation between the U.S. and Japan, including the signing of the Gateway Implementation Agreement in November 2022 as part of NASA’s Artemis missions for lunar exploration, offering a JAXA astronaut a crew position on a future Artemis mission. Additionally, Japan’s early commitment to the ISS extension until 2030, the signing of the Framework Agreement for Cooperation in Outer Space in January 2023, and subsequent dialogues and plans for a trade mission in May 2023, underscore a deepening partnership aimed at advancing space science, exploration, technology, and commercial opportunities between the two nations.

Upcoming Events

Japan International Aerospace Exhibition (“JA”)
Dates: October 16-19, 2024
Venue: Tokyo Big Sight
Website: https://japanaerospace.jp/en/
Description: Japan’s only large scale, fully integrated trade show on aerospace, defense and space. The most recent JA was held in 2018 in Tokyo with 520 exhibitors and 20,000 visitors. The U.S. Commercial Service Japan provided on-site counseling to U.S. exhibitors throughout the exhibition.

Defense and Security Equipment International (“DSEI”)
Dates: May 21-23, 2025
Venue: Makuhari Messe Center, Chiba
Website: https://www.dsei-japan.com/
Description: The only large-scale, fully integrated defense event. DSEI-Japan brings the global defense and security sector together with both the Japanese and wider Asian defense community to innovate, partner and share knowledge.

Contact Information

Sayoko Koto, Senior Commercial Specialist
U.S. Embassy – Tokyo
Email: Sayoko.Koto@trade.gov

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Market of the Month, Malaysia

Overview
The Malaysian security and defense sector offers opportunities for U.S. exporters. As with other ASEAN countries, Malaysia has territorial disputes with China and neighboring countries. The government also faces trafficking, piracy, and militants operating in the broader region. Protecting its maritime security is critical for Malaysia given its offshore economic assets and heavy reliance on sea trade.

Most procurements in aerospace and defense rely on imported products, as Malaysian manufacturers cannot yet produce the technologically advanced equipment required. The Malaysian Armed Forces (MAF) asset modernization has been progressing with the release of the country’s first Defense White Paper in 2020. That document emphasizes the need to boost Malaysia’s naval capabilities to prepare for possible conflict in the South China Sea and focuses on developing a modernized “smart army” using cyberspace technology and state-of-the-art systems.

With the ongoing defense modernization programs, opportunities exist across the entire security and defense sectors.

Aerospace
Malaysia launched the Malaysian Aerospace Industry Blueprint 2030, an initiative to position Malaysia as Southeast Asia’s most significant aerospace market.

Malaysia is currently home to more than 200 international and local aerospace companies. The demand for civil aerospace services and equipment continues to recover in the post-pandemic environment as air travel picks up with the reopening of borders.

Defense
In its latest budget, the government of Malaysia increased its allocation for defense and security to strengthen the level of defense readiness and national security. The recently announced 2024 budget includes $4.2 billion for the Ministry of Defense (MoD), a 10 percent increase from 2023. In addition to the MoD allocation, Malaysia’s Ministry of Home Affairs, which is responsible for public order, border and maritime security, crime, and terrorism prevention, has been allocated $4.1 billion.

With the increased allocation, Malaysia has identified acquisitions of particular importance, which include various types of vehicles for the Army, helicopters for the Royal Malaysian Air Force, and littoral mission ships for the Royal Malaysian Navy.

Procurement spending increasingly focuses on strengthening Malaysia’s ability to protect its coasts, territorial waters, offshore economic interests, and airspace and developing its intelligence, surveillance, and reconnaissance capability.

Upcoming Event

Defense Service Asia Exhibition and Conference (DSA) 2024
Hosted and co-organized by the Malaysian Ministry of Defense and Ministry of Home Affairs, DSA is one of the biggest Defense and Homeland Security shows in Asia showcasing advanced technologies, systems, hardware, and electronic warfare. The event will take place in Kuala Lumpur from May 06-09, 2024.

Langkawi International Maritime and Aerospace Exhibition (LIMA) 2025
This biennial event is one of the largest maritime and aerospace exhibitions in Asia Pacific which includes both the defense and commercial sector. The event will be held in Langkawi in 2025, with the date to be confirmed.

Contact Information

Siau Wei PUNG, Senior Commercial Specialist
U.S. Embassy – Malaysia
Email: siauwei.pung@trade.gov

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Civil Aviation
India boasts the world’s third-largest civil aviation market and one of the fastest-growing markets in the world. According to the Directorate General of Civil Aviation, domestic airlines carried 150 million passengers in 2023, a 22% jump from 2022, compared to 123 million in 2022, registering an annual growth of 22 percent. By 2030, India expects over 500 million air travelers, potentially becoming the global leader by 2047. India is projected to have more than 500 million domestic and international air travelers by 2030 and has the potential to become the world’s leading aviation market by 2047. The number of airports in India has increased to 149 in 2023 from 74 in 2014 and is expected to reach 220 by 2025. To support the aviation industry, many Indian states have reduced the value-added tax on aviation turbine fuel by up to 4%.
Since the launch of the regional connectivity scheme in 2016, India has operationalized 519 unserved/underserved routes and connected 76 airports from different regions to promote balanced regional growth and make flying affordable for the masses. India has a wide network of international flights through Air Service Agreements with 116 countries. India aspires to become the global hub for maintenance, repair, and overhaul (MRO) services. Approximately 90% of India’s MRO activity occurs outside of India, predominantly in Sri Lanka, Singapore, and Malaysia. In 2023, Indian leading airlines Tata-owned Air India and IndiGo placed orders for 470 airplanes (220 from Boeing and 250 from Airbus) and 500 Airbus A320 aircraft respectively. In 2024, Akasa Air placed an order for 150 Boeing 737 MAX aircraft. Given the commitment of the Indian government and airlines, India has huge potential for American companies to export products and services in the areas of airport infrastructure, avionics, training, maintenance, repair, and overhaul services.

Defense Sector:
India enjoys a unique status as a Major Defense Partner of the United States, unlocking opportunities to procure sensitive defense technologies. As bilateral ties between the United States and India strengthen, defense cooperation is likely to increase in parallel. Defense is one of the most promising sectors for U.S. exports to India thanks to the United States’ technological edge and India’s security needs. India has the third-largest armed forces in the world and continues to spend billions of dollars on defense articles every year. The government of India has budgeted $58 billion for defense expenditure, out of which $20 billion is earmarked for capital expenditures such as the modernization of military forces by procuring aircraft and aero engines, land defense systems, medium and heavy-duty vehicles, and the upgrading of ordnance factories, research, and development. India has committed to becoming self-reliant by manufacturing defense equipment locally and exporting it globally. As part of its indigenization drive, the Indian defense sector’s production has crossed $12 billion in 2023 and continues to grow further, creating an opportunity for American companies to supply components, software, equipment, and machinery.

We are in many U.S. Embassies & Consulates worldwide as well as major cities across the United States. Contact us to learn more about how we can assist companies to increase the exports of their U.S. technologies, products and services.

Contact Information

Sudhir KESHARWANI, Commercial Specialist
U.S. Embassy – India
Email: Sudhir.Kesharwani@trade.gov

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Market of the Month, Republic of Singapore

The aerospace industry in Asia Pacific has made remarkable strides over the past decade and the Southeast Asia region is growing rapidly where Singapore has become an industry leader as well as the region’s aerospace hub. It is the leader in aerospace maintenance, repair, and overhaul (MRO) services which has significant investments in research and development. Given Singapore’s strong position in the industry, there are increased opportunities for American firms in the regional aerospace market.

Aerospace
Post COVID-19, Singapore is expected to continue growing strongly due to the significant growth levels expected within the region. MRO services are foreseen to remain the largest segment of growth in the Singapore aerospace industry which amounted to US$10 billion in 2022. As in previous years prior to the COVD-19 pandemic, engine overhaul is anticipated to make up the largest portion of MRO spending, generating possibly under half of the MRO market. Activities such as line maintenance and component overhaul and repair all help the MRO market contribute easily 80% of the aerospace industry.

In addition, rapid technological advances and digitalization are also changing the complexion of aerospace manufacturing. New market segments including unmanned aerial systems (UAS) have emerged. These industry trends will transform existing jobs and create new skills in areas such as data analytics, additive manufacturing design and robotics engineering. Many global aerospace companies which are in the forefront of the industry have a long presence in Singapore.

Defense
With continued regional tensions caused by the South China Sea disputes and other geopolitics, combined with the presence of transnational terrorism, cyberattacks and maritime piracy, demand for defense equipment in Singapore is expected to increase, making Singapore’s defense market more appealing. In particular, demand for high-tech, high-end equipment continues as the primary impetus in keeping the relatively small Singapore Armed Forces (SAF) with the best-in-class equipment. As such, Singapore’s defense expenditure is expected to increase over the immediate years ahead, which will augur well for the local defense industry and provide greater opportunities to foreign defense suppliers in selling their wares to the SAF.

Space
Singapore has arguably one of Southeast Asia’s most diverse space eco-systems with over 2000 jobs created in 60 companies currently in the sector. These jobs range from design and manufacturing to data processing for satellites. Singapore has launched 19 satellites since 2011 while ongoing partnerships with companies and research institutions aim to further develop its satellite capabilities and create new space applications and services. The Office for Space Technology and Industry (OSTIn) at the Singapore Economic Development Board spearheads the country’s efforts in the sector and is looking at the application of international law on small satellites as well as the long-term sustainability in space.

Upcoming Events:
For companies seeking opportunities to enter the Singapore market in the areas of aircraft components & equipment, advanced air mobility, future tech / UAVs, MRO services and sustainability, there are several upcoming relevant events of interest:

Singapore Airshow 2024: The biennial event is Asia’s largest and most influential international aerospace and defense exhibition for stakeholders to forge strategic alliances, collaborate for change to shape the future of global aviation industry. The event will take place in Singapore, February 20-25, 2024.
Global Space and Technology Convention: Asia’s premier space and technology event, bringing the latest technology news, what’s hot in the satellite scene and space technology. The event will be held in Singapore, February 15-16, 2024.
Rotorcraft Asia & Unmanned Systems Asia: Scheduled for May 2025, the event brings together the convergence of rotorcraft and unmanned sectors and fosters an exchange of knowledge and synergies to elevate mobility solutions in the booming Asia Pacific market.

Contact Information

CHAN Y K, Commercial Specialist
U.S. Embassy – Singapore
Email: yiukei.chan@trade.gov

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MARKET OF THE MONTH

Saudi Arabia

Overview
Saudi Arabia’s defense market is overseen by the Ministry of Defense (MoD), which is responsible for Saudi Arabia’s national security, and has grown substantially over the last decade, in part due to a significant procurement drive fueled by the war in Yemen. As of 2023, Saudi Arabia has the fifth largest defense budget in the world following the United States, China, Russia, and India. According to the 2023 budget released by the Saudi Ministry of Finance in December 2022, the Kingdom will spend $69 billion in defense in 2023 – approximately 23 percent of its total budget, which increased by 50 percent from last year. The significant increase in the defense budget is part of the Saudi Vision 2030 goals and requirements to localize 50 percent of the Government spending in the defense sector.

Partnership between the United States and Saudi Arabia is based on over seven decades of close cooperation and cultural exchange, as well as abiding security ties. The United Staes and Saudi Arabia have a common interest in preserving the stability, security, and prosperity of the Gulf region and consult closely on a wide range of issues. Saudi Arabia is the United States’ largest foreign military sales (FMS) customer, with more than $84.3 billion in implemented FMS cases. According to the Stockholm International Peace Research Institute, Saudi Arabia imports nearly 80 percent of its arms from the United States. Through FMS, the United States supports three key security assistance organizations in Saudi Arabia – the Ministry of Defense, the National Guard, and the Ministry of the Interior.

Under the Vision 2030 economic diversification program, Saudi Arabia aims to localize 50 percent of its military procurement by 2030 under the aegis of two military industrial bodies: The General Authority for Military Industries (GAMI) and Saudi Arabian Military Industries (SAMI), which contracts directly with foreign companies. On numerous occasions, SAMI CEO Walid Abukhaled has stated the company’s goal to become a top 25 defense company by 2030, citing foreign partnerships and joint ventures as a route to rapid growth of the firm and the Saudi local defense industry as a whole. Though Saudi Arabia has legislation addressing defense procurement, in practice, most defense procurement is not formalized and instead is negotiated on a case-by-case basis. Success in Saudi Arabia’s defense sector requires a legal partner with a proven track record; for example, a joint venture agreement can be negotiated where the local partner focuses on business development and winning government contracts, while the U.S. partner manufactures and fulfills sales to the Saudi government.

Aerospace
While Saudi Arabia has normalized relations with Iran and maintained a lasting ceasefire with Yemen, aerospace, air defense and territorial defense remain strong government priorities. Key projects include construction of facilities at the King Salman Airbase and the relocation and establishment of the King Faisal Air Academy. Moving forward, GAMI has stressed the need for aircraft parts, and there is strong Saudi demand across all segments of the industry, including air defense capabilities, UAVs, aircraft engines, MRO capabilities, rotorcraft capabilities, military fixed-wing aircraft, structural component manufacturing, and space capabilities.

Defense
The Saudi Arabian MoD is a key player in the Gulf and broader Middle East as it continues to grow its defense capabilities and maintain regional stability. The Vision 2030 localization goal has led to a supply chain localization program identifying more than 70 investment opportunities in the defense sector in the Saudi market. Key projects include the modernization of the Ministry of the National Guard and the continued localization of 50 percent of defense procurement expenditures. GAMI is focusing its localization efforts on land-based systems as they are generally easier to produce and can be sped up or slowed down according to cash flow. Moving forward in 2023, there will be strong Saudi demand across all segments of the industry, including for ground equipment, cybersecurity, C4ISR equipment, Tactical Communications Systems, MRO capabilities, and structural component manufacturing.

Upcoming Events

World Defense Show (Feb, 2024), Riyadh, Saudi Arabia

Contact Information

Meet Hesham Alawad, Commercial Specialist
U.S. Commercial Service – Saudi Arabia
Email: Hesham.Alawad@trade.gov

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