New market study, "Pakistan Defence & Security Report Q1 2015", has been published

We expect an escalation in domestic security threats though 2015 in response to the NATO withdrawal from Afghanistan, the ongoing military offensive in the Federally Administered Tribal Area (FATA), and rising tensions with Indian forces along the Jammu Kashmir border. The Pakistan Government has increased military spending, and is investing in indigenous defence companies. They in turn are looking to increase capacity through international partnership, creating opportunities for foreign players.

The security situation in Pakistan has steadily deteriorated through 2014. Last year witnessed regular terrorist attacks against military and civilian assets, including Karachi International Airport. This illustrates that domestic and international terror cells are well resourced and well trained, making them a credible threat to domestic and international organisations. Moreover, the NATO withdrawal from Afghanistan will offer more freedom for militants to operate across the porous border region with Afghanistan, where the Pakistan defence forces have launched a military offensive against the Taliban.

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We also observe increased scope for interstate conflict with neighbouring India though 2014. Small arms fire and mortar exchanges occurred along the Jammu Kashmir border with increasing frequency, raising bilateral tensions to their highest point in a decade. Given its commitment in the west of the country, Pakistan will be unwilling to militarily engage India on a higher level. Over the last decade, the Indian army has grown in size and sophistication, and is now more powerful than the Pakistan armed forces, which are reliant on weapons of mass destruction as their ultimate deterrent.

In light of the increased scope for terrorism, interstate conflict, and criminality, the government of Pakistan is raising military expenditure. National defence spending grew by 11% in 2014, and remains a public expenditure priority, commanding 18% of the budget. Defence...

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