This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 8/10/2017

Overview
The table below are unofficial estimates of the Brazilian defense and aerospace market for import and export of equipment, parts, components, systems and others. Total market size equals local production plus imports.
 

Defense sector in Brazil

(in U.S. billions)

2015

2016

2017(estimated)

Total Market Size

7.1

6.0

6.8

Total Local Production

4.8

4.6

4.5

Total Exports

3.6

3.5

3.8

Total Imports

2.3

1.4

2.3

Imports from the U.S.

1.7

1.2

1.1

*  The above are unofficial estimates and assume an exchange rate of 3.10/US$

 
 
 
 
 
 
 
 
 
 















Source: Ministry of Defense/ Brazilian Association of Aerospace Industry (AIAB)/ Brazilian Association of Defense Material (ABIMDE)/ National Defense and Foreign Relations Committee at the Federal Senate/ FIESP – COMDEFESA/ AIAB.

Brazil's 2017 budget proposal for the defense sector is approximately US$30.3 billion. The National Strategy of Defense (NSD) published in 2008 and revised last year, continues to be the guide for the medium and long term strategy for the Defense sector in Brazil, highlighting three strategic sectors: nuclear, cyber, and space, as well as promoting the development and strengthening of the Brazilian defense industry.
 
The Minister of Defense highlighted at the LAAD 2017 trade show in Rio de Janeiro the following strategic defense projects: the Submarine Development Program (PROSUB), the Navy Nuclear Program (PNM), the Guarani, SISFRON, FX-2 and KC-390 as essential projects for Brazilian defense sector development and the country’s economy. Those projects will continue to move forward as permitted by the overall federal budget.
 

Leading Sub-Sectors
BRAZILIAN NAVY PRIORITY PROGRAMS
The Brazilian Navy’s most important strategic projects are the Submarine Development Program (PROSUB) and the Navy Nuclear Program (PNM). The PROSUB includes the production of four diesel-electric submarines and a single much larger nuclear powered submarine. The first conventionally-powered submarine is expected to be completed this year. The Brazilian Navy Nuclear Program foresees the development of a nuclear fuel production cycle, the development of a nuclear electric generation laboratory (LABGENE), the development and construction of a prototype reactor, and the upgrade to the Navy’s Technological Center in the State of Sao Paulo. The nuclear submarine should enter into operational service in 2029 and the total cost of this project will be US$10 billion dollars. (U.S. companies interested to supply good for the navy nuclear program need to comply with all U.S. restrictions).
 
The Brazilian Navy has recently announced the opening of another important strategic project: the construction of warships “Tamandaré Class Corvette”, which calls for the development and construction of four 2.7 thousand ton warships. The technical specifications of this project are available from the Brazilian Navy’s Management Program Directory (DgePM) in Rio de Janeiro. The bid process will be closed in 2018 with construction starting in 2019. The total investment is US$1.8 billion and in the long-term the Brazilian Navy’s orders could reach 12 units, depending on budget.
 
BRAZILIAN ARMY PRIORITY PROGRAMS
The Brazilian Army’s list of strategic projects includes the Guarani, SISFRON, and Cyber Defense. Guarani is a new family of armored, wheeled vehicles for troop transportation (VBTP-BR 6X6) and Armored Reconnaissance Vehicles (VBR-BR 8x8). Despite the recent cuts in its budget, the Army Command should receive 60 - 80 vehicles this year. A total of 1,580 vehicles should be delivered until 2035. The project total value is approximately US$3.1 billion.
 
Another strategic project for the Brazilian Army is the Integrated Border Monitoring System (SISFRON) which will create a system capable of monitoring incidents along the entire border. The projected total investment is US$4 billion through 2035. In 2017, the Ministry of Defense has allotted US$152 million for procurements related to SISFRON. The project’s second phase is under final planning and will include four other states, in addition to the pilot-project in Mato Grosso do Sul. According to Brazil’s Institutional Security Cabinet, Brazil will share technology, cost, and results of SISFRON with its neighboring countries. Discussions with Argentina on the topic have begun.
 
A third strategic project under development by the Brazilian Army Command since 2010, is Cyber Defense. The program’s goal is to provide Brazil a high-level structure to protect the country from cyberattacks. The project includes the construction of a Cyber Defense Center, the development of software and hardware solutions, the acquisition of super computers and digital forensic equipment and the creation of a national cyber defense school and a cyber defense command. The project’s total value is around US$106 million and should be concluded in 2020.
 
BRAZILIAN AIR FORCE PRIORITY PROGRAMS
The Brazilian Air Force’s most important strategic projects are the FX-2 Fighter aircraft, KC-390 cargo aircraft, and the Geostationary Satellite for Defense and Strategic Communications (SGDC), which launched in May 2017. The SGDC is operated by Telebras on the K (civilian) band and by the Ministry of Defense on the X (military) band. Visiona, a joint venture between Embraer and Telebras is responsible for integrating the SGDC system. Total value is around US$570 million with a service life of 18 years. The FX-2 fighter aircraft project includes the acquisition of 36 Gripen NG fighter aircraft from Sweden, with Embraer and SAAB as prime contractors. The FX-2 project does offer opportunities for sub-contractors to supply these primes. Both projects are priorities and will continue to move forward, according to the Minister of Defense.
 
An additional priority project for the Brazilian Air Force is the KC-390 cargo aircraft developed by Embraer. A total of 28 aircraft will be delivered over 12 years starting in 2018. The total value of this project is approximately US$2.4 billion, with several international suppliers expected to provide components.
 
Another essential project for the Air Force is the ATN – Air Traffic Management coordinated by the Commission for the Implementation of Airspace Control Systems (CISCEA). The ATN will be a Public-Private-Partnership to manage an integrated communication network. The winning bidder will be responsible for the project’s development, installation, operation, management and maintenance for 25 years under Brazilian Air Force guidance. The technical and economic study for ATN is currently underway and a public tender should be published this year.
 

Opportunities

The Brazilian Armed Forces have long-term development, construction and acquisition plans that include: weapons, escort ship platforms, transport ships, offshore patrol vessels, tugs and hydrographic/oceanographic ships, UAVs, long range radars, helicopters, tactical radio communication systems, and spare parts and components, among others. To conduct business with the Brazilian Armed Forces, U.S. companies must be prepared for a long and complex engagement. As in most industries, having a local office or a trusted and well-respected local representative with extensive contacts and a solid sales record is a critical business practice in order to succeed in Brazil. In addition to the ever-present desire for offsets, U.S. firms must be prepared to transfer technology (subject to pertinent export control regulations) and oftentimes engage in long-term partnership with the Brazilian aerospace and defense industry for the co-development and local production of components, parts, and assembly.
 
Since 2015, Brazil and the United States have engaged through the Defense Industry Dialogue (DID) to increase bilateral trade and investment in the defense sector, improve the regulatory and bureaucratic environment for U.S. and Brazilian defense firms, and enhance understanding of U.S. export control policies to increase opportunities for technology transfer and exchange. 
 

Web Resources

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Brazil Aerospace and Defense Trade Development and Promotion