Table of Contents 1 Introduction 10 1.1 What is this Report About? 10 1.2 Definitions 10 1.3 Summary Methodology 12 1.4 About Strategic Defence Intelligence 13 2 Executive Summary 14 3 Market Attractiveness and Emerging Opportunities 18 3.1 Current Market Scenario 19 3.1.1 Primary Threat Perception 19 3.1.2 Military Doctrine & Strategy 20 3.1.3 Military Fleet Size 40 3.1.4 Procurement Programs 46 3.1.5 Top Procurement Programs by Value (US$ Million) 2018-2023 52 3.1.6 Social, Political and Economic Environment and Support for Defense Projects 53 3.1.7 Political and Strategic Alliances 54 3.2 Defense Market Size Historical and Forecast 56 3.2.1 Russia’s defense budget to grow at a CAGR of 5.86% to value US$68.9 billion by 2023 56 3.2.2 Military modernization and defense exports to drive defense expenditure over the forecast period 59 3.2.3 Defense expenditure as a percentage of GDP is expected to average 3.56% over the forecast period 62 3.3 Analysis of Defense Budget Allocation 64 3.3.1 The majority of Russia’s defense budget is allocated to revenue expenditure 64 3.3.2 Capital expenditure is expected to record a CAGR of 6.21% during the forecast period 66 3.3.3 Per capita defense expenditure expected to increase over the forecast period 69 3.4 Homeland Security Market Size and Forecast 70 3.4.1 Russian homeland security expenditure forecast to reach US$43.4 billion by 2023 70 3.4.2 Border security and the fight against cyber-attacks are the main factors encouraging growth in the homeland security market 72 3.4.3 The Terrorism Heat Map considers Russia a “highly affected” region 74 3.4.4 Russia faces a “high risk” from acts of terrorism 75 3.4.5 Russia faces a significant threat from terrorists 77 3.5 Benchmarking with Key Global Markets 78 3.5.1 Russia’s defense budget is expected to grow significantly during the forecast period 78 3.5.2 Russia is the world’s third largest defense spender 80 3.5.3 Russia allocated 3.4% of its GDP to defense in 2018 81 3.6 Market Opportunities: Key Trends and Growth Stimulators 82 3.6.1 Top Defense Market Sectors by Value (US$ Million) - Projections over 2018-2023 82 3.6.2 Land Based C4ISR 83 3.6.3 Critical Infrastructure Protection (CIP) - Physical Security 85 3.6.4 Airborne C4ISR 87 4 Defense Procurement Market Dynamics 88 4.1 Import Market Dynamics 89 4.1.1 The country’s defense imports are low owing to a developed indigenous sector 89 4.1.2 Ukraine was the key defense supplier to Russia 91 4.1.3 Aircraft and engines were the key defense imports during 2013-2017 92 4.2 Export Market Dynamics 93 4.2.1 Russia’s exports witnessed a decline during 2013-2017 93 4.2.2 India, China, and Vietnam are Russia’s main defense equipment purchasers 94 4.2.3 Aircraft and ships account for the majority of Russia’s defense exports 95 5 Industry Dynamics 96 5.1 Five Forces Analysis 96 5.1.1 Bargaining Power of Supplier: Medium to High 97 5.1.2 Bargaining Power of Buyer: High 97 5.1.3 Barrier to Entry: High 97 5.1.4 Intensity of Rivalry: High 97 5.1.5 Threat of Substitution: High 97 6 Market Entry Strategy 98 6.1 Market Regulation 98 6.1.1 Entry into the defense sector is highly regulated 98 6.2 Market Entry Route 99 6.2.1 Budgeting Process 100 6.2.2 Procurement Policy and Process 102 6.3 Key Challenges 103 6.3.1 Russian government’s aversion to Western defense technology 103 7 Competitive Landscape and Strategic Insights 104 7.1 Competitive Landscape Overview 104 7.1.1 The domestic industry is consolidating to provide better focus and fund allocation 106 7.1.2 Defense sector is dominated by domestic firms, with no foreign presence 106 7.2 Key Domestic Companies 107 7.2.1 United Aircraft Corporation - Overview 107 7.2.2 United Aircraft Corporation - Major Products 107 7.2.3 United Aircraft Corporation - Recent Announcements and Strategic Initiatives 107 7.2.4 United Aircraft Corporation - Alliances 109 7.2.5 United Aircraft Corporation (UAC) - Recent Contract Awards 110 7.2.6 United Aircraft Corporation (UAC) - Financial Analysis 111 7.2.7 Sukhoi - Overview 113 7.2.8 Sukhoi - Major Products 113 7.2.9 Sukhoi- Recent Announcements and Strategic Initiatives 114 7.2.10 Sukhoi - Alliances 116 7.2.11 Sukhoi: Recent Contract Awards 116 7.2.12 Irkut Corporation - Overview 118 7.2.13 Irkut Corporation - Major Products 118 7.2.14 Irkut Corporation - Recent Announcements and Strategic Initiatives 119 7.2.15 Irkut Corporation - Alliances 119 7.2.16 Irkut Corporation - Recent Contract Wins 120 7.2.17 Irkut Corporation - Financial Analysis 121 7.2.18 Rostec - Overview 123 7.2.19 Rostec - Major Products 124 7.2.20 Rostec- Recent Announcements and Strategic Initiatives 124 7.2.21 Rostec - Alliances 125 7.2.22 Rostec: Recent Contract Awards 126 7.2.23 Uralvagonzavod - Overview 127 7.2.24 Uralvagonzavod - Major Products 127 7.2.25 Uralvagonzavod - Recent Announcements and Strategic Initiatives 127 7.2.26 Uralvagonzavod - Alliances 128 7.2.27 Uralvagonzavod - Recent Contract Wins 129 7.2.28 Splav - Overview 130 7.2.29 Splav - Major Products 130 7.2.30 Splav - Recent Announcements and Strategic Initiatives 130 7.2.31 Splav - Alliances 130 7.2.32 KBP Instrument Design Bureau - Overview 131 7.2.33 KBP Instrument Design Bureau - Major Products 131 7.2.34 KBP Instrument Design Bureau - Recent Announcements and Strategic Initiatives 132 7.2.35 KBP Instrument Design Bureau - Recent Contract Wins 133 7.2.36 V.A.Degtyarev Plant - Overview 134 7.2.37 V.A.Degtyarev Plant - Major Products 135 7.2.38 Kalashnikov Concern - Overview 136 7.2.39 Kalashnikov Concern - Major Products 136 7.2.40 Kalashnikov Concern - Recent Announcements and Strategic Initiatives 137 7.2.41 Oboronprom Corporation - Overview 138 7.2.42 Oboronprom Corporation - Major Products 138 7.2.43 Oboronprom Corporation - Recent Announcements and Strategic Initiatives 139 7.2.44 Oboronprom Corporation - Alliances 140 7.2.45 Oboronprom Corporation - Recent Contract Wins 140 7.2.46 United Engine Corporation (UEC) - Overview 142 7.2.47 United Engine Corporation (UEC) - Major Products 142 7.2.48 United Engine Corporation (UEC) - Recent Announcements and Strategic Initiatives 142 7.2.49 Tactical Missiles Corporation: Overview 143 7.2.50 Tactical Missiles Corporation - Major Products 144 7.2.51 Tactical Missiles Corporation - Recent Announcements and Strategic Initiatives 144 7.2.52 Tactical Missiles Corporation - Alliances 145 7.2.53 Tactical Missiles Corporation - Recent Contract Wins 145 7.2.54 Almaz-Antey - Overview 146 7.2.55 Almaz-Antey - Major Products 146 7.2.56 Almaz-Antey - Recent Announcements and Strategic Initiatives 146 7.2.57 Almaz-Antey - Alliances 147 7.2.58 Almaz-Antey - Recent Contract Wins 147 7.2.59 Kurganmashzavod - Overview 148 7.2.60 Kurganmashzavod - Major Products and Services 148 7.2.61 Kurganmashzavod - Recent Announcements and Strategic Initiatives 149 7.2.62 Kurganmashzavod - Alliances 149 7.2.63 Kurganmashzavod - Recent Contract Wins 150 7.2.64 United Shipbuilding Corporation - Overview 151 7.2.65 United Shipbuilding Corporation (USC) - Major Products and Services 152 7.2.66 United Shipbuilding Corporation (USC) - Recent Announcements and Strategic Initiatives 153 7.2.67 United Shipbuilding Corporation - Recent Contract Wins 154 8 Business Environment and Country Risk 155 8.1 Economic Performance 155 8.1.1 GDP Per Capita, US$ 155 8.1.2 GDP (current US$ Billion) 156 8.1.3 Exports of Goods and Services (LCU Billion) 157 8.1.4 Imports of Goods and Services (LCU Billion) 158 8.1.5 Gross National Disposable Income (US$ Billion) 159 8.1.6 LCU per US$ (Period Average) 160 8.1.7 Market Capitalization of Listed Companies (US$ Billion) 161 8.1.8 Market Capitalization of Listed Companies (% of GDP) 162 8.1.9 Government Cash Surplus/Deficit as a Percentage of GDP (LCU) 163 8.1.10 Goods Exports as a Percentage of GDP 164 8.1.11 Goods Imports as a Percentage of GDP 165 8.1.12 Services Imports as a Percentage of GDP 166 8.1.13 Services Exports as a Percentage of GDP 167 8.1.14 Foreign Direct Investment, net (BoP, current US$ Billion) 168 8.1.15 Net Foreign Direct Investment as a Percentage of GDP 169 8.1.16 Mining, Manufacturing, and Utilities Output (LCU Billion) 170 9 Appendix 171 9.1 About SDI 171 9.2 Disclaimer 171

List of Tables Table 1: Key Electronic Warfare Systems 21 Table 2: Key Long Range Ballistic Missile Programs 23 Table 3: Ongoing Nuclear Delivery Platform Programs 25 Table 4: Ongoing Naval Modernization Programs 28 Table 5: Key Tactical Attack Weapon Systems and Precision Guided Munitions Projects 30 Table 6: Key Air Force Modernization Programs 32 Table 7: Key Air Defense Programs 33 Table 8: Key Air Force Transport Aircraft Modernization Programs 35 Table 9: Key Programs for Development of Unmanned Systems 36 Table 10: Key Army Modernization Programs 38 Table 11: Russian Ground Forces Strength 40 Table 12: Russian Aerospace Defense Forces Strength 42 Table 13: Russian Naval Forces Strength 44 Table 14: Russian - On-going Development and Procurement Programs 46 Table 15: Russian - Future Procurement Programs 49 Table 16: Top Russian Defense Procurement Programs by Value (US$ Million) 2018-2023 52 Table 17: Russian Defense Expenditure (RUB Billion & US$ Billion), 2014-2023 57 Table 18: Russian GDP Growth and Defense Expenditure as a Percentage of GDP Growth, 2014-2023 62 Table 19: Russian Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023 65 Table 20: Russian Defense Capital Expenditure (RUB Billion and US$ Billion), 2014-2023 67 Table 21: Russian Per Capita Defense Expenditure (US$), 2014-2023 69 Table 22: Russian Homeland Security Expenditure (RUB Billion & US$ Billion), 2014-2023 70 Table 23: Terrorism Index, 2018 75 Table 24: Benchmarking with Key Markets: 2014-2018 vs. 2019-2023 78 Table 25: Top Russian Defense Market Sectors by Value (US$ Million) - 2018-2023 82 Table 26: Russian Budget Formation Timetable 100 Table 27: Top Defense Suppliers in The US Defense Industry - By Value (US$ Million) 2018-2023 104 Table 28: Competitive Landscape of the Russian Defense Industry 105 Table 29: United Aircraft Corporation - Major Products 107 Table 30: United Aircraft Corporation - Alliances 109 Table 31: United Aircraft Corporation (UAC) - Recent Contract Wins 110 Table 32: Sukhoi - Major Products 113 Table 33: Sukhoi - Alliances 116 Table 34: Sukhoi - Recent Contract Wins 116 Table 35: Irkut Corporation - Major Products 118 Table 36: Irkut Corporation - Alliances 119 Table 37: Irkut Corporation - Recent Contract Wins 120 Table 38: Rostec - Major Products 124 Table 39: Sukhoi - Alliances 125 Table 40: Rostec - Recent Contract Wins 126 Table 41: Uralvagonzavod - Major Products 127 Table 42: Uralvagonzavod - Alliances 128 Table 43: Uralvagonzavod - Recent Contract Wins 129 Table 44: Splav - Major Products 130 Table 45: Splav - Alliances 130 Table 46: KBP Instrument Design Bureau - Major Products 131 Table 47: KBP Instrument Design Bureau - recent contract wins 133 Table 48: V.A.Degtyarev Plant - Major Products 135 Table 49: Kalashnikov Concern - Major Products 136 Table 50: Oboronprom Corporation - Major Products 138 Table 51: Oboronprom Corporation - Alliances 140 Table 52: Oboronprom Corporation - Recent Contract Wins 140 Table 53: United Engine Corporation (UEC) - Major Products 142 Table 54: Tactical Missiles Corporation - Major Products 144 Table 55: Tactical Missiles Corporation - Alliances 145 Table 56: Tactical Missiles Corporation - Recent Contract Wins 145 Table 57: Almaz-Antey - Major Products 146 Table 58: Almaz-Antey - Alliances 147 Table 59: Almaz-Antey - Recent Contract Wins 147 Table 60: Kurganmashzavod - Major Products and Services 148 Table 61: Kurganmashzavod - Alliances 149 Table 62: Kurganmashzavod - Recent Contract Wins 150 Table 63: United Shipbuilding Corporation (USC) - Major Products and Services 152 Table 64: United Shipbuilding Corporation - Recent Contract Wins 154 List of Figures Figure 1: Russian Defense Expenditure (RUB Billion), 2014-2023 57 Figure 2: Russian Defense Expenditure (US$ Billion), 2014-2023 58 Figure 3: Russian GDP Growth vs. Defense Expenditure as Percentage of GDP Growth, 2014-2023 63 Figure 4: Russian Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023 65 Figure 5: Russian Defense Capital Expenditure (RUB Billion), 2014-2023 67 Figure 6: Russian Defense Capital Expenditure (US$ Billion), 2014-2023 68 Figure 7: Russian Per Capita Defense Expenditure (US$), 2014-2023 69 Figure 8: Russian Homeland Security Budget (RUB Billion), 2014-2023 71 Figure 9: Russian Homeland Security Budget (US$ Billion), 2014-2023 71 Figure 10: Terrorism Heat Map, 2018 74 Figure 11: Terrorism Index 77 Figure 12: Benchmarking with Key Markets - 2014-2018 vs. 2019-2023 79 Figure 13: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2018 and 2023 80 Figure 14: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2018 81 Figure 15: Land Based C4ISR Market Size (US$ Million), 2018-2023 84 Figure 16: Critical Infrastructure Protection (CIP) - Physical Security Market Size (US$ Million), 2018-2023 86 Figure 17: Airborne C4ISR Market Size (US$ Million), 2018-2023 87 Figure 18: Top Russian Defense Procurements in Terms of Their Supplier Relationships 88 Figure 19: Russian Defense Import Trend, 2013-2017 (TIV values) 90 Figure 20: Russian Defense Imports by Country (%), 2013-2017 91 Figure 21: Russian Defense Imports by Category (%), 2013-2017 92 Figure 22: Russian Defense Export Trend, 2013-2017 (TIV values) 93 Figure 23: Russian Defense Exports by Country (%), 2013-2017 94 Figure 24: Russian Defense Exports by Category (%), 2013-2017 95 Figure 25: Industry Dynamics - Porter’s Five Forces Analysis 96 Figure 26: United Aircraft Corporation (UAC) - Revenue Trend Analysis (RUB Billion), 2012-2016 111 Figure 27: United Aircraft Corporation (UAC) - Operating Profit Trend Analysis (RUB Billion), 2012-2016 112 Figure 28: United Aircraft Corporation (UAC) - Net Profit Trend Analysis (RUB Billion), 2012-2016 112 Figure 29: Irkut Corporation - Revenue Trend Analysis (RUB Billion), 2012-2016 121 Figure 30: Irkut Corporation - Operating Profit (RUB Million), 2012-2016 121 Figure 31: Irkut Corporation - Net Profit Trend Analysis (RUB Million), 2012-2016 122 Figure 32: GDP Per Capita in US$, 2015-2025 155 Figure 33: GDP (Current US$ Billion), 2015-2025 156 Figure 34: Exports of Goods and Services (LCU Billion), 2005-2014 157 Figure 35: Imports of Goods and Services (LCU Billion), 2005-2014 158 Figure 36: Gross National Disposable Income (US$ Billion), 2008-2013 159 Figure 37: LCU Per US$ (Period Average), 2015-2024 160 Figure 38: Market Capitalization of Listed Companies (US$ Billion), 2005-2012 161 Figure 39: Market Capitalization of Listed Companies (% of GDP), 2005-2012 162 Figure 40: Government Cash Surplus/Deficit as a Percentage of GDP (LCU), 2005-2012 163 Figure 41: Goods Exports as a Percentage of GDP, 2005-2014 164 Figure 42: Goods Imports as a Percentage of GDP, 2005-2014 165 Figure 43: Service Imports as a Percentage of GDP, 2005-2014 166 Figure 44: Services Exports as a Percentage of GDP, 2005-2012 167 Figure 45: Foreign Direct Investment, Net (BoP, Current US$ Billion), 2005-2014 168 Figure 46: Net Foreign Direct Investment as a Percentage of GDP, 2005-2014 169 Figure 47: Mining, Manufacturing, Utilities Output (LCU Billion), 2005-2014 170

United Aircraft Corporation (UAC) Sukhoi Irkut Corporation Rostec Uralvagonzavod (UVZ) Splav KBP Instrument Design Bureau V.A.Degtyarev Plant Kalashnikov Concern Oboronprom Corporation United Engine Corporation (UEC) Tactical Missiles Corporation Almaz-Antey Kurganmashzavod United Shipbuilding Corporation (USC)