Pakistan’s defence export potential

According to data published by the International Trade Center, in 2021 Pakistan was able to export $3.8 million worth of military equipment and the country imported $30.1 million. As industries go, this is one where there is some potential for exports by Pakistan’s own standards. 

And while the industry is robust relatively, there is much to be desired. For starters, Pakistan isn’t even a blip on the map of the global defence market. The overall market size according to the “Defence Global Market Report 2022” is $ 513.7 billion. With a compound annual growth rate (CAGR) of 8.2%, the global defence industry increased from $474.69 billion the previous year. Pakistan’s portion in this is unmentionable. So what can be done? 

Pakistan’s defence industry

It starts with a delightful little moment in time where military history and the etymology of the English language meet paths. In the 16th century, the military shorthand for a written command given by a senior officer was referred to as an ‘ordinance’. Of course, the word ordinance itself has a religious root, with ‘ordinances’ being Christian rituals that need to be followed rather strictly. 

And while that is where the military got its usage of the word ordinance from, at some point there was a slight change. A lot of the ordinances that were issued by commanding officers, particularly in writing, had to do with the issuance of arms and ammunition. Very quickly, the word ordinance became synonymous with weaponry. At some point the ‘i’ dropped out of the word and ‘ordnance’ became shorthand for all kinds of arms and ammunition. 

That is why in Pakistan and in India, arms manufacturing plants are called ‘ordnance factories’. A relic of colonialism, the East India Company realised very quickly that to increase their political hold they considered military hardware as a vital element. During 1775 British authorities accepted the establishment of the Board of Ordnance in Fort William, Kolkata. This marks the official beginning of the Army Ordnance in India.

The growth of the Ordnance Factories was continuous but in spurts. There were 18 ordnance factories at the time of partition in 1947, and all of them were on the Indian side of the border. Since none of the sixteen ordnance factories on the subcontinent were located inside the new Pakistan’s limits, they all came under Indian control after the partition. This has significantly infringed the country’s ability to expand its share in the global market for defence. 

The founding of Pakistan Ordnance Factories (POF) in 1951 to produce the necessary ammunition for the Defense Forces and Law Enforcement Agencies marked the beginning of indigenous weapon development.

From then on Pakistan has been able to make significant strides in domestic production to meet the military’s defence requirements. Multiple production facilities have been established throughout Pakistan that are able to meet some of the requirements of the military. 

As of today Pakistan develops a range of systems both in the public and private domains. The bulk of defence production is done through state owned entities such as Heavy Industries Taxila (HIT), Global Industrial Defence Solutions (GIDS) or Pakistan Ordinance Factory (POF). 

To simplify the overall structure, all of the defence industries fall under the jurisdiction of the Ministry of Defence Production. Under this ministry there are several state run entities for the most part being run by serving or retired military officers. 

Defence is the new priority 

The last two decades have seen significant developments in the domain of defence production. This in particular can be attributed to the global war on terror, this spurred investment and capital towards developing and producing new and modern weapon systems. 

If you were to consider more recent developments, governments and military analysts around the world have realised that conventional warfighting capabilities cannot be undermined in light of the Russia-Ukraine war and the Nagorno Karabakh conflict between Azerbaijan and Armenia. 

The role of heavy equipment — such as tanks, artillery and warplanes—  in a conventional war was being debated all over the world, whether or not the cost of upgrading and maintaining this equipment was worth it. 

The recent conflicts have shown how critical heavy equipment in combination with infantry is critical to achieving battlefield success. However it must be noted that how these weapon systems are applied in the battlefield make the difference. 

The war in Ukraine is drawing in weapons from all over the world right now and the difference in performance of Soviet origin equipment against its western counterparts is being revealed. The difference in quality of the equipment was also glaringly obvious during Operation Swift Retort in 2019 by the Pakistan Air Force. 

Pakistan is not behind the curve either as the country has the capacity to manufacture its own weapon systems ranging from fighter jets to small arms, however the quality, integration and manufacturing ability require attention. 

The modern battlefield

The war in Ukraine and the Nagorno Karabakh war has completely transformed how wars are being fought. Excessive use of smart weapons and artificial intelligence has made wars way more violent than they used to be. 

Drones are dictating how wars are fought at the moment as armies want to minimise the risk to their combatants. Furthermore drones provide a very clear and real time picture of the battlefield assisting commanders in making decisions on a macro as well as micro level. 

To give you an example as the war wages on in Ukraine, social media and information technology has allowed armies to strike terror into the hearts of their enemies. Each day new footage emerges from the battlefield showing how modern weapon systems work. 

The most obvious example portraying this is how the Azerbaijani military released hours of drone footage showing strikes on the Armenian military during the Nagorno Karabakh conflict. Without a doubt drones and loitering munitions originating from Turkey and Israel made the difference and it was recognised by Azerbaijan. At victory parades in Baku, flags of both the countries were carried next to the Azerbaijani flag. 

The footage served as an amazing propaganda tool for Azerbaijan, not only did it motivate their own military but also damaged the morale of the opposing side. Similarly in Ukraine footage emerging from drones shows how the war is being fought from both sides. 

What can Pakistan do in the defence industry ? 

To understand how defence export deals work, it must be first understood that it involves a lot of various factors ranging from diplomatic ties to trade ties. Furthermore what equipment is being exported or bought also matters, for instance the Pakistan Air Force operates a fleet of F-16 fighter jets which require a constant supply of spare parts and other necessary equipment to keep the jets flying. 

Consider the fact that since Russia invaded Ukraine, India has been struggling with arranging spare parts for various Russian origin equipment. Furthermore delays are expected in delivery of Russian origin tanks that India had purchased, since Russia is prioritising its own military requirements over exports. 

This has also been proven by pictures which show the export version of the Russian main battle tank T-90 being used by its army on the frontline. This clearly shows how the operational effectiveness of Indian equipment is being compromised as spare parts and equipment are being diverted to the frontlines in Ukraine rather than being exported. 

Therefore any defence deal involving heavy equipment such as tanks or fighter jets requires a very long term approach. And the final decision of the importing country is prone to external pressures. For instance India has blocked several potential deals that Pakistan would have signed with the French government, due to the fact that India is a huge customer for French products especially in the defence sector. 

The most obvious advantage that we have over other countries is the lower costs for equipment that is just as good as it western counterparts to fulfil the requirements of countries that do not have a huge defence budget at their disposal. 

Furthermore, given the recent conflict in Ukraine, it has become a test bed for new equipment. Pakistan too can get in on the action by exporting critical equipment like anti-tank guided missiles which are in huge demand by the Ukrainian military, it would not only boost sales but also serve to complement the relationship we have with Ukraine.

Other high end equipment such as drones and surveillance equipment can also be offered which would also serve as an excellent marketing tool for Pakistan origin equipment. As the situation stands, news outlets have already reported how Pakistan has supplied artillery shells to Ukraine which were airlifted by British cargo planes from Pakistan. 

Pakistan has the capacity

Pakistan has the ability to develop and employ modern weapon systems, and given the current global outlook there is a gap in the market specifically in developing countries. The US and European defence exporters are prioritising Ukraine at the moment leaving other players to market and sell products that are in short supply like armoured vehicles, small arms, ammunition etc. 

Israel is a model example of focusing on defence exports that has the potential to transform an entire economy. Outside of the US, Israel is one of the biggest innovative giants in the market and is a huge player in the global defence market. 

Although it might not be ideal to compare Pakistan to Israel, there are commonalities in circumstances between the two countries. Public private collaboration and opening up the defence industry to the private sector can play a huge role in promoting the industry, as it stands the demand for our own military itself can serve as a lucrative opportunity for private players to enter the market.