Small Caliber Ammunition Market - Growth, Trends, and Forecasts (2020 - 2025)

The growing threats due to terrorism, territorial conflicts, and geopolitical tensions have forced the countries to increase their defense spending. According to the Stockholm International Peace Research Institute (SIPRI), the total global military expenditure increased to USD 1,917 billion in 2019 which represents an increase of 3.6% from 2018. This is the largest annual growth in spending since 2010. The growing defense budgets have facilitated the increasing investments in military modernization programs aimed at the procurement of better weapons to supplement or replace the existing weapons arsenal. The impact of military modernization on the ammunition market is being witnessed in countries like Germany, France, India, China, and Russia, which are spending significantly on enhancing the capabilities of their ground forces by inducting state-of-the-art small arms. For instance, in January 2019, the Norwegian Defence Materiel Agency has awarded a contract to German defense manufacturing company Heckler & Koch for the delivery of HK416 A5 assault rifles. The HK416 A5 is a further development of the combat-proven HK416 assault rifle that fires 5.56 x 45 mm NATO caliber ammunition. In addition, the need to maintain a sufficient inventory of ammunition with the militaries worldwide and the increasing demand for training ammunition is also anticipated to have a positive impact on the military small caliber ammunition segment. In addition, several militaries have been involved in peacekeeping missions and counter-insurgency operations in foreign countries and require continuous supply of ammunition for continuing their operations. This has been driving the growth of the segment currently.However, with the US-led troops planning to move out of the conflict zones, such as Afghanistan, Iraq and Somalia in phases and governments emphasizing further on the troop reduction initiatives, the market for military small caliber ammunition is expected to register lesser growth in the years to come, as compared to the growth observed in the last decade. Militaries are increasingly moving towards higher calibers like 7.62 mm projectiles, as the existing widely used calibers like the 5.56 mm are becoming ineffective in piercing the tougher armors. Countries, like the United States and India, are also developing firearms based on new calibers like the 6.8 mm ammunition, which are expected to witness higher demand in the years to come.

North America is the largest market for small caliber ammunition in 2019. The US has one of the largest armed forces in the world, with 2.26 million total military personnel. The country has the largest military spending in the world. According to SIPRI, the United States spent around 718.69 billion U.S. dollars on its military in 2019. The military of the United States is deployed in more than 150 countries across the world, with several of the military personnel assigned in conflict zones like Afghanistan, Iraq, and Syria. In addition to active combat, US personnel are typically deployed as part of several peacekeeping missions, military attachés, or are part of the embassy, consulate security, and several other classified missions. Such deployments have significantly contributed toward the growth of procurement of arms and ammunition by the US armed forces. The US Army is currently planning to move away from the 5.56 mm round in its infantry weapons, which has been the standard for decades. In September 2019, the US Army has selected three firms to advance to the next phase of testing to select the service's Next Generation Squad Weapon. The Army chose General Dynamics-OTS Inc., AAI Corporation Textron Systems, and Sig Sauer Inc. to deliver prototypes of both the automatic rifle and rifle versions of the NGSW, as well as hundreds of thousands of rounds of special 6.8 mm ammunition common to both weapons. On the other hand, the civilians in the US alone account for more than about 45% of the worldwide total of civilian held firearms. Government initiatives aimed at creating personal safety awareness programs drive the civilian small arms and ammunition demand in the country. Programs like the Civilian Marksmanship Program promotes firearm safety training and rifle practice for citizens with special focus on youth. After 2016, the firearm sales in US have come down as the consumers stopped worrying about any future restriction on gun sales and did not tend to buy in advance. However, this might change in the coming months as people might tend to buy firearms amid concerns that the new government will mandate background checks for all gun sales and ban assault weapons sales. Nevertheless, despite the slump in sales in the past few years, the ammunition sales are still on the rise due to the high volumes of already existing firearms in the country.