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Future of the Sri Lankan Defense Industry –

Market Attractiveness, Competitive Landscape

and Forecasts to 2020

Future of the Sri Lankan Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2020

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Summary

“Future of the Sri Lankan Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts

to 2020” report offers the reader detailed analysis of the defense budget over the next five years. Alongside

it offers insights into the market opportunities and entry strategies adopted by foreign OEMs (original

equipment manufacturers) to gain a market share in the Sri Lankan defense industry.

The report provides detailed analysis of the current industry size and growth expectations during 2016–

2020, including highlights of the key growth stimulators. It also benchmarks the industry against key global

markets and provides detailed understanding of emerging opportunities in specific areas.

Key Findings

The Sri Lankan defense budget stands at US$XX billion in 2015, registering a CAGR of XX% during the

historic period. An increase in defense expenditure is expected during the forecast period, at a CAGR of

XX%, driving the defense budget to value US$XX billion in 2020. The country’s defense expenditure will

largely be driven by the need to rebuild its armed forces to counter the threat of the re-emergence of the

separatist militant organization, de-mining, and rehabilitation in the Northern Province, which is largely

undertaken by the country’s military forces. In addition, capital expenditure is expected to increase at a

CAGR of XX% during the forecast period to value US$XX million in 2020. On a cumulative basis, the

country is estimated to spend US$XX billion over the forecast period on the procurement of defense

equipment. In the coming years, demand for equipment is mainly expected to revolve around patrol vessels

and naval infrastructure, combat aircraft, and transport helicopter. The majority of the defense budget will

go towards revenue expenditure, which includes personnel salaries, operational expenses, training, and

development.

Key Features and Benefits

The report provides detailed analysis of the Sri Lankan defense industry during 2011–2020, including the

factors that influence the military expenditure. It provides detailed expectations of growth rates and

projected total expenditure.

It provides the manufacturers with insights on market opportunities along with industry structure and

dynamics prevalent in the country. In addition, the report focuses on the regulations governing the Sri

Lankan defense industry and the potential market entry strategies with an expert analysis of the

competitive structure.


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1. Market Attractiveness and Emerging Opportunities

1.1. Defense Market Size Historical and Forecast

1.1.1. Sri Lankan defense expenditure expected to register a CAGR of XX% over the forecast period

The Sri Lankan government allocated US$XX billion to its total defense budget in 2015, recording a CAGR of

XX%. Moreover, the country’s defense budget is expected to register a CAGR of XX% during the forecast

period to value US$XX billion in 2020. This increase is primarily due to the country’s military ambitions to de-

mine the land containing anti-tank mines and other IEDs (Improvised Explosive devices) rehabilitate the

Northern Province, counter the threat of the re-emergence of LTTE affiliates, replace obsolete military

equipment, and to deal with a tense relationship with India.

The following table and figure show the Sri Lankan defense expenditure during the historic period:

Table 1: Sri Lankan Defense Expenditure ( US$ Billion), 2011–2015

Year Defense expenditure (US$ bn)

Defense growth percentage

2011

2012

2013

2014

2015

CAGR 2011–2015

Source: Ministry of Defense and SDI analysis © SDI

Figure 1: Sri Lankan Defense Expenditure (US$ Billion), 2011–2015


-5%

0%

5%

10%

15%

20%

25%

30%

35%

0

1

2

3

4

5

6

2011 2012 2013 2014 2015

Gro

wth

rate

(%)

Def

ense

exp

end

itu

re (U

S$

Bill

ion

)

Defense expenditure (US$ bn) Defense growth percentage


4

The following table and figure show projected defense expenditure of the Sri Lankan over the forecast

period:

Table 2: Sri Lankan Defense Expenditure (US$ Billion), 2016–2020

Year Defense expenditure (US$ bn)

Defense growth percentage

2016

2017

2018

2019

2020

CAGR 2016–2020


Figure 2: Sri Lankan Defense Expenditure (US$ Billion), 2016–2020


0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

0

1

2

3

4

5

6

7

2016 2017 2018 2019 2020

Gro

wth

ra

te (

%)

De

fen

se

ex

pe

nd

itu

re (

US

$ B

illi

on

)

Defense expenditure (US$ bn) Defense growth percentage


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1.2. Analysis of Defense Budget Allocation

1.2.1. Share of capital expenditure expected to increase over forecast period

During 2011–2015, an average of XX% of the country’s defense budget was allocated to capital expenditure,

while an average of XX% was reserved for revenue expenditure. Capital expenditure is anticipated to grow at

an average of XX% during the forecast period. The increase is primarily due to the need to replace the

country’s obsolete military equipment such as fighter aircraft, naval vessels, offshore patrol vessels, and

surveillance systems and equipment. The remaining budget is allocated to revenue expenditure, which

includes personnel salaries, and the operation and maintenance costs of equipment and defense facilities.

The following table and chart display the Sri Lankan defense budget share of capital and revenue

expenditure during the historic period:

Table 3: Sri Lankan Defense Budget Split Between Capital and Revenue Expenditure (%), 2011–2015

Year Capital Expenditure Share Revenue Expenditure Share

2011

2012

2013

2014

2015

Source: Ministry of Defense, Sri Lanka and SDI analysis © SDI

Figure 3: Sri Lankan Defense Budget Split Between Capital and Revenue Expenditure (%), 2011–

2015


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2012 2013 2014 2015

Def

ense

Bud

get

Spl

it (%

)

Capital Expenditure Share Revenue Expenditure Share


6

The following table and chart display the Sri Lankan defense budget share of capital and revenue

expenditure over the forecast period:

Table 4: Sri Lankan Defense Budget Split Between Capital and Revenue Expenditure (%), 2016–2020

Year Capital Expenditure Share Revenue Expenditure Share

2016

2017

2018

2019

2020

Source: Ministry of Defense, Sri Lanka and SDI analysis © SDI

Figure 4: Sri Lankan Defense Budget Split Between Capital and Revenue Expenditure (%), 2016–

2020


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2016 2017 2018 2019 2020

Defe

nse B

ud

get

Sp

lit

(%)

Capital Expenditure Share Revenue Expenditure Share


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1.3. Homeland Security Market Size and Forecast

1.3.1. Sri Lankan homeland security expected to grow at a steady pace

Sri Lankan homeland security expenditure values US$XX million in 2015 and registered a CAGR of XX%

during 2011–2015. Furthermore, it is expected to increase at a CAGR of XX% over the forecast period to

value US$XX million in 2020. This increase is due to the growing problems of terrorism, piracy, oil pollution

spills, and illegal drug and arms trafficking. Expenditure on maritime security, in order to curb the challenges

of narcotics and weapon trafficking, will drive homeland security expenditure. Additionally, the country is

expected to spend on modernizing its police, salaries of personnel, and developing its infrastructure along

with the procurement of advanced surveillance systems. On a cumulative basis, the expenditure on

homeland security is expected to be US$XX billion over the forecast period.

The table and chart below show the Sri Lankan homeland security expenditure during the historic period:

Table 5: Sri Lankan Homeland Security Expenditure (US$ Billion), 2011–2015

Year Homeland expenditure

(US$ billion) % Growth

2011

2012

2013

2014

2015

Source: Ministry of Interior, Sri Lanka and SDI analysis © SDI

Figure 5: Sri Lankan Homeland Security Expenditure (US$ Billion), 2011–2015

Source: Ministry of Interior, Sri Lanka and SDI analysis © SDI

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

0

1

2

3

4

5

6

7

2011 2012 2013 2014 2015

Gro

wth

rate

(%)

Ho

mel

and

Sec

uri

ty e

xpen

dit

ure

(US

$ B

illio

n)

Homeland Security Budget (US$ bn) Growth rate (%)


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2. Industry Dynamics - Porter’s Five Forces Analysis

Figure 4: Industry Dynamics – Porter’s Five Forces Analysis

Source: SDI analysis © SDI

Intensity of Rivalry Bargaining Power of Supplier

Bargaining Power of Buyer

Barrier to Entry

Threat of Substitute


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Report Methodology

SDI’s dedicated research and analysis teams consist of experienced professionals with a background in

industry research and consulting in the defense sector. The following research methodology is followed for all

databases and reports:

Secondary Research

The research process begins with exhaustive secondary research to source reliable qualitative and

quantitative information related to the defense market. The secondary research sources that are typically

referred to include, but are not limited to:

Industry associations

National government documents and statistical databases

Company websites, annual reports, financial reports, broker reports, investor presentations

Industry trade journals and other literature

Internal and external proprietary databases

News articles, press releases, and webcasts specific to the companies operating in the market

Primary Research

SDI conducts hundreds of primary interviews a year with industry participants and commentators in order to

validate its data and analysis. A typical research interview fulfills the following functions:

Provides first-hand information on market size, market trends, growth trends, competitive landscape,

and future outlook

Helps to validate and strengthen secondary research findings

Further develops the analysis team’s expertise and market understanding

Primary research involves e-mail interactions, telephone interviews, and face-to-face interviews for

each market category, division, and sub-division across geographies

The participants who typically take part in such a process include, but are not limited to:

Industry participants: CEOs, VPs, business development managers, market intelligence managers,

and national sales managers

External experts: investment bankers, valuation experts, research analysts, and key opinion leaders

specializing in defense markets

Conventions

Currency conversions are performed on the basis of average annual conversion rate format

calculations

All the values in tables, with the exception of compounded annual growth rate (CAGR) and

compounded annual rate of change (CARC), are displayed to one decimal place; therefore, due to

this rounding method, growth rates may appear inconsistent with absolute values

The forecasted values are projected on the basis of nominal values; the inflation was not taken into account


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TABLE OF CONTENTS

1. Introduction ........................................................................................................................... 9

1.1. What is this Report About? ........................................................................................................... 9

1.2. Definitions ...................................................................................................................................... 9

1.3. Summary Methodology .................................................................................................................11

1.4. SDI Terrorism Index ......................................................................................................................12

1.5. About Strategic Defence Intelligence ..........................................................................................12

2. Executive Summary ............................................................................................................ 13

3. Market Attractiveness and Emerging Opportunities ........................................................ 15

3.1. Defense Market Size Historical and Forecast..............................................................................16

3.1.1. Sri Lankan defense budget to grow at a CAGR of XX% during 2016–2020 to value US$XX billion in

2020 .................................................................................................................................................................. 16

3.1.2. De-mining and rehabilitation efforts, and a strained relationship with India are expected to drive

defense expenditure .............................................................................................................................................. 20

3.1.3. Sri Lankan defense expenditure as a percentage of GDP is expected to decrease at an average of

XX% during 2016–2020 ........................................................................................................................................ 22

3.2. Analysis of Defense Budget Allocation .......................................................................................24

3.2.1. Share of capital expenditure expected to increase over forecast period ................................................. 24

3.2.2. Capital expenditure to increase at a CAGR of XX% during the forecast period ...................................... 26

3.2.3. Sri Lankan Army accounts for the largest share of defense expenditure ................................................. 30

3.2.4. The country is expected to invest US$XX billion in its army during the forecast period .......................... 32

3.2.5. Naval defense budget projected to grow at a CAGR of XX% during the forecast period ........................ 36

3.2.6. Air force expenditure expected to register a CAGR of XX% during the forecast period .......................... 40

3.2.7. Per capita defense expenditure expected to increase over the forecast period ...................................... 44

3.3. Homeland Security Market Size and Forecast ............................................................................46

3.3.1. Sri Lankan homeland security expected to grow over the forecast period ............................................... 46

3.3.2. Maritime security and communal violence are expected to drive Sri Lankan homeland security

expenditure ........................................................................................................................................................... 50

3.3.3. Sri Lank falls under “highly affected” of terrorism category ...................................................................... 51

3.4. Benchmarking with Key Global Markets .....................................................................................53

3.4.1. Sri Lankan defense budget expected to increase over the forecast period ............................................. 53

3.4.2. Sri Lankan military expenditure remains limited compared to countries with the largest defense

expenditure ........................................................................................................................................................... 55

3.4.3. Sri Lanka spent over XX% of its GDP on defense in 2015 ...................................................................... 56

3.4.4. Sri Lank faces high threat from foreign terrorist organizations ................................................................. 57

3.5. Market Opportunities: Key Trends and Growth Stimulators ......................................................59

3.5.1. Demand for patrol vessels and naval infrastructure expected to increase over the forecast period ........ 59


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3.5.2. Air force modernization will create demand for combat aircraft ............................................................... 59

3.5.3. Demand for transport helicopters expected to surge during the forecast period ..................................... 60

4. Defense Procurement Market Dynamics ........................................................................... 61

4.1. Import Market Dynamics ...............................................................................................................62

4.1.1. Defense imports are expected to remain low during the forecast period. ................................................ 62

4.1.2. Sri Lanka sourced the majority of its arms imports from Israel ................................................................ 63

4.1.3. Ships and aircraft dominated military hardware imports .......................................................................... 64

4.2. Export Market Dynamics ..............................................................................................................65

4.2.1. The country exported negligible defense goods during 2010–2014 ........................................................ 65

5. Industry Dynamics .............................................................................................................. 66

5.1. Five Forces Analysis.....................................................................................................................66

5.1.1. Bargaining power of supplier: low ............................................................................................................. 67

5.1.2. Bargaining power of buyer: medium ......................................................................................................... 67

5.1.3. Barrier to entry: medium ........................................................................................................................... 67

5.1.4. Intensity of rivalry: low .............................................................................................................................. 67

5.1.5. Threat of substitution: high ....................................................................................................................... 67

6. Market Entry Strategy ......................................................................................................... 68

6.1. Market Regulation .........................................................................................................................68

6.1.1. Undisclosed FDI policy relating to defense .............................................................................................. 68

6.2. Market Entry Route .......................................................................................................................68

6.2.1. Cooperative agreement and partnerships an easier way to access the Sri Lanka defense market ........ 68

6.2.2. Equipment manufacturers enter the market through direct sales ............................................................ 68

6.3. Key Challenges .............................................................................................................................69

6.3.1. Corruption and lack of transparency pose an obstacle for market entry .................................................. 69

6.3.2. Underdeveloped domestic industry and internal instability discourages foreign participation ................. 69

6.3.3. Limited defense budget deters investors from market entry .................................................................... 69

7. Competitive Landscape and Strategic Insights ................................................................ 70

7.1. Competitive Landscape Overview ...............................................................................................70

7.1.1. Colombo Dockyard Plc.: overview ............................................................................................................ 70

7.1.2. Colombo Dockyard Plc.: products ............................................................................................................ 70

7.1.3. Colombo Dockyard Plc.: recent announcements and strategic initiatives ................................................ 71

7.1.4. Colombo Dockyard Plc: alliances ............................................................................................................. 71

7.1.5. Colombo Dockyard Plc.: recent contract wins .......................................................................................... 71

7.1.6. Colombo Dockyard Plc.: financial analysis ............................................................................................... 72

8. Business Environment and Country Risk ......................................................................... 74

8.1. Demographics & Social Statistics ................................................................................................74

8.1.1. Population – Rural .................................................................................................................................... 74


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8.1.2. Population - Urban .................................................................................................................................... 75

8.1.3. Population – Number of Households ........................................................................................................ 76

8.2. Economic Performance ................................................................................................................77

8.2.1. Gross Domestic per Capita....................................................................................................................... 77

8.2.2. Gross Domestic Product, current US$ ..................................................................................................... 78

8.2.3. Exports of Goods and Services ................................................................................................................ 79

8.2.4. Imports of Goods and Services ................................................................................................................ 80

8.2.5. Gross National Disposable Income .......................................................................................................... 81

8.2.6. Manufacturing Output ............................................................................................................................... 82

8.2.7. Consumer Price Index .............................................................................................................................. 83

8.2.8. Wholesale Price Index .............................................................................................................................. 84

8.2.9. Local Currency Unit per US$ .................................................................................................................... 85

8.2.10. Local Currency Unit per EURO ................................................................................................................ 86

8.2.11. Lending Rate (%) ...................................................................................................................................... 87

8.2.12. Deposit Rate (%) ...................................................................................................................................... 88

8.2.13. Real Interest Rate (%) .............................................................................................................................. 89

8.2.14. Market Capitalization of Listed Companies .............................................................................................. 90

8.2.15. Market Capitalization of Listed Companies as a % of GDP ..................................................................... 91

8.2.16. Goods Exports as a % of GDP ................................................................................................................. 92

8.2.17. Goods Imports as a % of GDP ................................................................................................................. 93

8.2.18. Goods Trade Surplus/Deficit as a % of GDP............................................................................................ 94

8.2.19. Services Imports as a % of GDP .............................................................................................................. 95

8.2.20. Services Exports as a % of GDP .............................................................................................................. 96

8.2.21. Services trade surplus/deficit as a % of GDP ........................................................................................... 97

8.2.22. Net Foreign Direct Investment .................................................................................................................. 98

8.2.23. Net FDI as a % of GDP ............................................................................................................................. 99

8.2.24. International reserves, including Gold .................................................................................................... 100

8.3. Energy and Utilities ..................................................................................................................... 101

8.3.1. Total Conventional Thermal Electricity Net Generation ......................................................................... 101

8.3.2. Hydroelectricity Net Generation .............................................................................................................. 102

8.3.3. Nuclear Electricity Net Generation ......................................................................................................... 103

8.3.4. Total Conventional Thermal Electricity Installed Capacity ..................................................................... 104

8.3.5. Total Petroleum Consumption ................................................................................................................ 105

8.4. Infrastructure Quality and Availability ....................................................................................... 106

8.4.1. Air transport, freight ................................................................................................................................ 106

8.4.2. Minerals .................................................................................................................................................. 107

8.4.3. Mining, Manufacturing, Utilities Output ................................................................................................... 107


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8.5. Technology .................................................................................................................................. 108

8.5.1. Patents Granted ...................................................................................................................................... 108

8.6. Telecommunication .................................................................................................................... 109

8.6.1. Telephone lines ...................................................................................................................................... 109

8.6.2. Telephone lines Penetration Rate .......................................................................................................... 110

9. Appendix ............................................................................................................................ 111

9.1. About SDI ..................................................................................................................................... 111

9.2. Disclaimer .................................................................................................................................... 111


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LIST OF FIGURES

Figure 1: Sri Lankan Defense Expenditure (US$ Billion), 2011–2015 ................................................................................................................. 16 Figure 2: Sri Lankan Defense Expenditure (US$ Billion), 2016–2020 ................................................................................................................. 17 Figure 3: Sri Lankan Defense Expenditure (in LKR billion), 2011–2015 .............................................................................................................. 18 Figure 4: Sri Lankan Defense Expenditure (in LKR billion), 2016–2020 .............................................................................................................. 19 Figure 5: Sri Lankan GDP Growth vs. Defense Expenditure Growth and Defense Expenditures Percentage of GDP Growth, 2011–2015 ........ 22 Figure 6: Sri Lankan GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2016–2020 ..... 23 Figure 7:Sri Lankan defense Budget Split Between Capital and Revenue Expenditure (%), 2011–2015 ............................................................. 24 Figure 8: Sri Lankan defense Budget Split Between Capital and Revenue Expenditure (%), 2016–2020 ............................................................ 25 Figure 9: Sri Lankan Defense Capital Expenditure (US$ Million), 2011–2015 ..................................................................................................... 26 Figure 10: Sri Lankan Defense Capital Expenditure (US$ Million), 2016–2020 ................................................................................................... 27 Figure 11: Sri Lankan Capital Expenditure (in LKR billion), 2011–2015 .............................................................................................................. 28 Figure 12: Sri Lankan Capital Expenditure (in LKR billion), 2016–2020 .............................................................................................................. 29 Figure 13: Sri Lankan Defense Budget Allocation (%), 2011–2015 ..................................................................................................................... 30 Figure 14: Sri Lankan Defense Budget Allocation (%), 2016–2020 ..................................................................................................................... 31 Figure 15: Sri Lankan Defense Budget Allocation for Army (US$ Billion), 2011–2015 ........................................................................................ 32 Figure 16: Sri Lankan Defense Budget Allocation for Army (US$ Billion), 2016–2020 ........................................................................................ 33 Figure 17: Sri Lankan Defense Budget Allocation for Army (LKR Billion), 2011–2015 ......................................................................................... 34 Figure 18: Sri Lankan Defense Budget Allocation for Army (LKR Billion), 2016–2020 ......................................................................................... 35 Figure 19: Sri Lankan Defense Budget Allocation for Navy (US$ Million), 2011–2015 ....................................................................................... 36 Figure 20: Sri Lankan Defense Budget Allocation for Navy (US$ Million), 2016–2020 ....................................................................................... 37 Figure 21: Sri Lankan Defense Budget Allocation for Navy (LKR Billion), 2011–2015 ........................................................................................ 38 Figure 22: Sri Lankan Defense Budget Allocation for Navy (LKR Billion), 2016–2020 ........................................................................................ 39 Figure 23: Sri Lankan Defense Budget Allocation for Air Force (US$ Million), 2011–2015 .................................................................................. 40 Figure 24: Sri Lankan Defense Budget Allocation for Air Force (US$ Million), 2016–2020 .................................................................................. 41 Figure 25: Sri Lankan Defense Budget Allocation for Air Force (LKR Billion), 2011–2015 .................................................................................. 42 Figure 26: Sri Lankan Defense Budget Allocation for Air Force (LKR Billion), 2016–2020 .................................................................................. 43 Figure 27: Sri Lankan per capita defense expenditure (US$), 2011–2015 .......................................................................................................... 44 Figure 28: Sri Lankan per capita defense expenditure (US$), 2016–2020 .......................................................................................................... 45 Figure 29: Sri Lankan Homeland Security Budget (US$ Million), 2011–2015 ...................................................................................................... 46 Figure 30: Sri Lankan Homeland Security Budget (US$ Million), 2016–2020 ...................................................................................................... 47 Figure 31: Sri Lankan Homeland Security Budget (in LKR billion), 2011–2015 ................................................................................................... 48 Figure 32: Sri Lankan Homeland Security Budget (in LKR billion), 2016–2020 ................................................................................................... 49 Figure 33: SDI Terrorism Heat Map, 2015 .......................................................................................................................................................... 51 Figure 34: SDI Terrorism Index, 2015 ................................................................................................................................................................. 52 Figure 35: Benchmarking with Key Markets – 2011–2015 vs. 2016–2020 .......................................................................................................... 54 Figure 36: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2015 and 2020 ............................................................ 55 Figure 37: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2015 ..................................................................... 56 Figure 38: Sri Lankan Defense Import Trend, 2010–2014 (TIV values) ............................................................................................................... 62 Figure 39: Sri Lankan Defense Imports by Country (%), 2010–2014 ................................................................................................................... 63 Figure 40: Sri Lankan Defense Imports by Category (%), 2010–2014 ................................................................................................................. 64 Figure 41: Industry Dynamics - Porter’s Five Forces Analysis............................................................................................................................. 66 Figure 42: Colombo Dockyard Plc. - Revenue Trend Analysis (LKR million), 2010–2014 ................................................................................... 72 Figure 43: Colombo Dockyard Plc. - Operating Profit Trend Analysis (LKR million), 2010–2014 ......................................................................... 73 Figure 44: Colombo Dockyard Plc. - Net Profit Trend Analysis (LKR million), 2010–2014 ................................................................................... 73 Figure 45: Sri Lankan Population – Rural (In Millions), 2015–2024 ..................................................................................................................... 74 Figure 46: Sri Lankan Population – Urban (In Millions), 2015–2024 .................................................................................................................... 75 Figure 47: Sri Lankan Population – Number of Households (In Millions), 2008–2017 ......................................................................................... 76 Figure 48: Sri Lankan GDP per capita, 2015–2024 ............................................................................................................................................. 77 Figure 49: Sri Lankan Gross Domestic Product (current US$ Bn), 2015–2024 ................................................................................................... 78 Figure 50: Sri Lankan Exports of goods and services (current US$ Bn), 2002–2011 .......................................................................................... 79 Figure 51: Sri Lankan Imports of goods and services (current US$ Bn), 2002–2011 ........................................................................................... 80 Figure 52: Sri Lankan gross national disposable income (US$ Bn), 2002–2011 ................................................................................................. 81 Figure 53: Sri Lankan Manufacturing Output (US$ Bn), 2002–2011 .................................................................................................................... 82 Figure 54: Sri Lankan Consumer Price Index, 2015–2024 .................................................................................................................................. 83 Figure 55: Sri Lankan Wholesale Price Index, 2001–2010 .................................................................................................................................. 84


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Figure 56: Sri Lankan LCU per US$, 2015–2024 ................................................................................................................................................ 85 Figure 57: Sri Lankan LCU per EURO, 2015–2024............................................................................................................................................. 86 Figure 58: Sri Lankan Lending Rate (%), 2003–2012 ......................................................................................................................................... 87 Figure 59: Sri Lankan Deposit Rate (%), 2003–2012 .......................................................................................................................................... 88 Figure 60: Sri Lankan Real Interest Rate (%), 2003–2012 .................................................................................................................................. 89 Figure 61: Sri Lankan Market Capitalization of listed Companies (US$ Bn), 2003–2012 ..................................................................................... 90 Figure 62: Sri Lankan Market Capitalization of listed companies as a % of GDP, 2002–2011 ............................................................................. 91 Figure 63: Sri Lankan Goods Exports as a % of GDP, 2002–2011 ..................................................................................................................... 92 Figure 64: Sri Lankan Goods Imports as a % of GDP, 2002–2011...................................................................................................................... 93 Figure 65: Sri Lankan Goods Trade Surplus/Deficit as a % of GDP, 2002–2011 ................................................................................................ 94 Figure 66: Sri Lankan Services Imports as a % of GDP, 2002–2011 .................................................................................................................. 95 Figure 67: Sri Lankan Services Exports as a % of GDP, 2002–2011 .................................................................................................................. 96 Figure 68: Sri Lankan Services trade surplus/deficit as a % of GDP, 2002–2011 ................................................................................................ 97 Figure 69: Sri Lankan Net Foreign Direct Investment (current US$ BN), 2002–2011 .......................................................................................... 98 Figure 70: Sri Lankan Net FDI as a % of GDP, 2002–2011 ................................................................................................................................ 99 Figure 71: Sri Lankan International reserves, including Gold (US$ Bn), 2002–2011 ..........................................................................................100 Figure 72: Sri Lankan Total Conventional Thermal Electricity Net Generation (Bn KWH), 2001–2010 ...............................................................101 Figure 73: Sri Lankan Hydroelectricity Net Generation (Bn KWH), 2001–2010 ..................................................................................................102 Figure 74: Sri Lankan Nuclear Electricity Net Generation (Bn KWH), 2001–2010 ..............................................................................................103 Figure 75: Sri Lankan Total Conventional Thermal Electricity Installed Capacity (Million Kilowatts), 2001–2010 ................................................104 Figure 76: Sri Lankan Total Petroleum Consumption (Thousand Barrels per Day), 2003–2012 .........................................................................105 Figure 77: Sri Lankan Air transport, freight (Million ton-Km), 2003–2012 ...........................................................................................................106 Figure 78: Sri Lankan Mining, Manufacturing, Utilities Output(US$ Bn), 2002–2011 ..........................................................................................107 Figure 79: Sri Lankan Patents Granted, 2003–2012 ..........................................................................................................................................108 Figure 80: Sri Lankan Telephone lines, 2003–2012 ...........................................................................................................................................109 Figure 81: Sri Lankan Telephone lines Penetration Rate (per 100 people), 2003–2012 .....................................................................................110


16

LIST OF TABLES

Table 1: Sri Lankan Defense Expenditure (US$ Billion), 2011–2015................................................................................................................... 16 Table 2: Sri Lankan defense Expenditure (US$ Billion), 2016–2020 ................................................................................................................... 17 Table 3: Sri Lankan Defense Expenditure (in LKR billion), 2011–2015 .............................................................................................................. 18 Table 4: Sri Lankan Defense Expenditure (in LKR billion), 2016–2020 ............................................................................................................... 19 Table 5: Sri Lankan GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2011–2015........ 22 Table 6: Sri Lankan GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2016–2020........ 23 Table 7: Sri Lankan defense Budget Split Between Capital and Revenue Expenditure (%), 2011–2015 ............................................................. 24 Table 8: Sri Lankan defense Budget Split Between Capital and Revenue Expenditure (%), 2016–2020 ............................................................. 25 Table 9: Sri Lankan Defense Capital Expenditure (US$ Million), 2011–2015 ...................................................................................................... 26 Table 10: Sri Lankan Defense Capital Expenditure (US$ Million), 2016–2020 .................................................................................................... 27 Table 11: Sri Lankan Capital Expenditure (in LKR billion), 2011–2015 ............................................................................................................... 28 Table 12: Sri Lankan Capital Expenditure (in LKR billion), 2016–2020 ............................................................................................................... 29 Table 13: Sri Lankan Defense Budget Allocation (%), 2011–2015 ...................................................................................................................... 30 Table 14: Sri Lankan Defense Budget Allocation (%), 2016–2020 ...................................................................................................................... 31 Table 15: Sri Lankan Defense Budget Allocation for Army (US$ Billion), 2011–2015 ......................................................................................... 32 Table 16: Sri Lankan Defense Budget Allocation for Army (US$ Billion), 2016–2020 ......................................................................................... 33 Table 17: Sri Lankan Defense Budget Allocation for Army (LKR Billion), 2011–2015 .......................................................................................... 34 Table 18: Sri Lankan Defense Budget Allocation for Army (LKR Billion), 2016–2020 .......................................................................................... 35 Table 19: Sri Lankan Defense Budget Allocation for Navy (US$ Million), 2011–2015 ........................................................................................ 36 Table 20: Sri Lankan Defense Budget Allocation for Navy (US$ Million), 2016–2020 ........................................................................................ 37 Table 21: Sri Lankan Defense Budget Allocation for Navy (LKR Billion), 2011–2015 ......................................................................................... 38 Table 22: Sri Lankan Defense Budget Allocation for Navy (LKR Billion), 2016–2020 ......................................................................................... 39 Table 23: Sri Lankan Defense Budget Allocation for the Air Force (US$ Million), 2011–2015 ............................................................................. 40 Table 24: Sri Lankan Defense Budget Allocation for Air Force (US$ Million), 2016–2020 ................................................................................... 41 Table 25: Sri Lankan Defense Budget Allocation for Air Force (LKR Billion), 2011–2015 ................................................................................... 42 Table 26: Sri Lankan Defense Budget Allocation for Air Force (LKR Billion), 2016–2020 .................................................................................... 43 Table 27: Sri Lankan per capita defense expenditure (US$), 2011–2015 ............................................................................................................ 44 Table 28: Sri Lankan per capita defense expenditure (US$), 2016–2020 ............................................................................................................ 45 Table 29: Sri Lankan Homeland Security Budget (US$ Million), 2011–2015 ....................................................................................................... 46 Table 30: Sri Lankan Homeland Security Budget (US$ Million), 2016–2020 ....................................................................................................... 47 Table 31: Sri Lankan Homeland Security Budget (in LKR billion), 2011–2015 .................................................................................................... 48 Table 32: Sri Lankan Homeland Security Budget (in LKR billion), 2016–2020 .................................................................................................... 49 Table 33: Benchmarking with Key Markets – 2011–2015 vs. 2016–2020............................................................................................................ 53 Table34: SDI Terrorism Index ............................................................................................................................................................................. 57 Table 35: Colombo Dockyard Plc.– Key Products and Services ......................................................................................................................... 70 Table 36: Colombo Dockyard Plc. – Alliances..................................................................................................................................................... 71 Table 37: Colombo Dockyard Plc. – Recent Contracts ....................................................................................................................................... 71

Future of the Sri Lankan Defense Industry Market ... · equipment manufacturers) to gain a market...

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