Ammunition plays a decisive role in escalating, prolonging, or intensifying armed conflict. It is consumable and continuously replenished. The ammunition is used primarily with small arms as well as with some light weapons. Small caliber ammunition is majorly used by military/armed forces, homeland security departments, and government agencies worldwide; such a large base of customers leads to an increasingly high demand for them. Surging terrorist activities across the world as well as increasing internal and international conflicts are compelling government agencies and military authorities, and police departments to procure this type of ammunition. Furthermore, military modernization initiatives being implemented in major defense countries are gathering greater focus on spending significant amounts on the procurement of ammunition, which is supporting the market growth.

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Impact of COVID-19 Pandemic on Small Caliber Ammunition Market

The COVID–19 outbreak has significantly affected the world and is continuing to shatter several countries. Until the outbreak, the defense industry was experiencing substantial growth in terms of production and services. Due to the pandemic, ammunition and assembly line manufacturing across the world have been negatively impacted. Despite the importance of ammunition manufacturing for military applications, the production of ammunition is disrupted owing to the restrictions on supply chain. The level of COVID-19 exposure a country faces, the level at which manufacturing operations are running, and import-export regulations, among other things, all factors are playing an important role in resuming ammunition manufacturing and demand. Several countries have decided to cut their defense budgets in general. Budgets for the research and noncritical sectors are likely to be temporarily cut as defense departments focus more on critical sectors to national security.

Further, advancements in ammunition sizes are also significantly contributing to the small caliber ammunition market growth. For instance, the development of .300 Blackout (BLK) bullet has compelled the army professionals to prefer .300 Blackout for special operation missions as it offers more stopping power. In line with its plans to shift to the 6.8mm caliber, the US army has launched the Next Generation Squad Weapon program to develop prototypes. However, the demand for small caliber ammunition size of 5.56 mm still continues, particularly, due to its superior aeroballistics performance, and consequent better accuracy, over long ranges. In collaboration with companies such as Heckler & Koch GmbH, France and Germany, among others, are introducing new rifles that are chambered for 5.56mm, and these products are likely be in service for another 20–25 years. In developing countries, continuous efforts are being made to upgrade and modernize existing small caliber ammunition production facilities.

Strategic Insights

Product development is the commonly adopted strategy by companies to expand their product portfolio.General Dynamics Ordnance and Tactical Systems, Thales Group, Northrop Grumman Corporation, BAE Systems, and Vista Outdoorare among the key players implementing strategies to gain significant share in the global small caliber ammunition market. A few of the recent key developments are:

  • In 2020, the UK military awarded a contract of worth US$ 3.2 billion to BAE Systems to supply munitions to military forces for next 15 years. The contractual program named, Next Generation Munitions Solution (NGMS), include production of small-arms ammunition, mortars, tank shells, medium-caliber gun rounds, and heavy artillery rounds. In 2020, Thales’s Australian Munitions business recorded its largest year of munitions export orders to date, signing more than US$ 30 million in munitions orders to the US, New Zealand, Canada, Asia, and Europe.

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Contact Information:

The Insight Partners
533, 5th Floor,
Amanora Chambers, East Block, Amanora Township,
Kharadi Road, Hadapsar, Pune-411028
Phone : +1-646-491-9876