Indonesian Defense Industry

The Indonesian defense industry is anticipated to register a CAGR of 3.24%, reaching USD 9.94 billion by 2026.

Within the vehicles segment, the land-based vehicles segment is expected to register the highest CAGR of 7.64% during the forecast period
Within the weapons and ammunition segment, the infantry weapons segment is expected to register the highest CAGR of 5.58% during the forecast period.

The country’s defense budget for 2021 has been set at USD 9.2 billion (IDR 136.99 trillion). The 2021 budget is a 16.2% increase over the original 2020 defense budget. The growth in the defense budget is expected to drive the market growth during the forecast period.
In June 2021, Indonesia unveiled a plan to spend USD 125 billion through to the mid-2040s to upgrade and modernize its military arsenal. Spending priorities during the 2021-2024 period include strengthening the domestic defense industry, procurement of aircraft and naval submarines, communication systems, intelligence, and border security, as well as guided munitions and air-defense systems.
The military planned to reach an ideal defense posture by 2025 or 2026 and would not need to buy major military hardware until at least 2044

In February 2022, Indonesia signed a series of agreements with France including submarine development and ammunition. Indonesia plans to order 42 Rafale fighter jets under a USD 8.1 billion deal. This order would make Indonesia the second state in the Indo-Pacific region after India to rely on the jet produced by Dassault Aviation.
In July 2021, a procurement contract was signed Indonesian Air force and South Korean aircraft maker Korea Aerospace Industries (KAI) worth 240 million. KAI is expected to deliver six T-50 trainer jets by October 24
In June 2021, Indonesia has announced its plans for the purchase of two second-hand Tupi-class (German Type 209/1400) diesel-electric submarines from the Brazilian Navy. The country announced that the original requirement for 12 submarines by 2024 to reduce to eight.
The Indonesian and Japanese governments signed a defense cooperation agreement that allows the transfer and sale of Japanese defense equipment and technology to Indonesia. As part of this collaboration, Japan expected to deliver up to 8 Mogami-class stealth frigates to Indonesia, also known as 30FFM,30FF,30DX, or 30DEX.

In July 2021, PT Dirgantara Indonesia delivered two Bell 412EPI helicopters as a part of the order for nine helicopters by the Ministry of Defense. The aircraft is planned to be operated by the Army Aviation Center's 11th Assault Squadron (Puspenerbad). Previously, the company delivered three Bell 412EPI helicopters.
In June 2021, Fincantieri was selected by the Ministry of Defense of Indonesia to supply six FREMM class frigates as well as modernize and sell two Maestrale class frigates and the related logistical support. With the delivery of new naval vessels, the country’s FREMM class frigate fleet is anticipated to increase to 10.
In Mar 2021, DSME (Daewoo Shipbuilding & Marine Engineering Co. Ltd) announced that the company successfully delivered the third Nagapasa-class submarine, KRI Alugoro. The submarine was assembled in Indonesia under a transfer of technology agreement with DSME worth USD 1 billion.