Established defense industries in Russia and the West are confronting a more contested global arms market, as a growing number of countries develop credible domestic production capabilities and reduce their dependence on traditional suppliers, according to analysts at the International Institute for Strategic Studies. The assessment, detailed in IISS findings reported by Defense News, reflects a structural shift in the defense-industrial landscape that carries long-term consequences for both export revenues and geopolitical influence.

The trend is particularly significant given the degree to which arms exports function as instruments of foreign policy. Losing market share does not merely represent a commercial setback for defense firms — it can erode the alliances, basing arrangements, and interoperability agreements that accompany major weapons transfers. For analysts tracking great-power competition, the redistribution of arms-market influence is as much a strategic indicator as a commercial one.

Emerging Producers Reshape the Competitive Landscape

The IISS analysis highlights that nations in Asia and the Middle East have made measurable progress in building indigenous defense industries. Countries that were once almost entirely reliant on imported platforms and systems are now developing the engineering base, manufacturing capacity, and export ambitions to compete at the regional level. This is not a uniform phenomenon — capability gaps remain significant — but the trajectory is clear enough to register as a sustained pressure on incumbent exporters.

For Russia, the challenge is compounded by the performance reputation of its export products, sanctions pressure limiting financial transactions, and the logistical difficulties some customers have faced in sustaining Russian-origin equipment. Western firms, meanwhile, face competition not only from Russia and China but increasingly from countries such as South Korea, Turkey, and Israel, each of which has expanded its export portfolio in recent years with domestically developed platforms that offer competitive price points and fewer political conditions than Western governments typically attach to arms sales.

Strategic and Industrial Implications for Traditional Exporters

The implications for defense-industrial policy are considerable. If established exporters lose consistent access to foreign customers, the volume of production runs that justify sustained investment in advanced manufacturing and research and development shrinks accordingly. Defense firms depend on export orders to spread fixed costs and maintain production lines between domestic procurement cycles. A narrowing export base could, over time, affect the financial health of the broader defense-industrial ecosystem.

Western governments have responded in part by streamlining foreign military sale processes and offering more competitive financing arrangements, though critics argue those adjustments have not kept pace with the speed at which competitors have moved. The IISS assessment underscores that the problem is not solely one of price or process — it is increasingly one of perception, as buyers weigh the reliability of supply chains, the willingness of suppliers to transfer technology, and the absence of political conditionality. Those factors shape purchasing decisions as directly as unit cost or platform capability. Related dynamics in the broader defense-industrial economy, including how major contractors balance domestic and export demands, are visible in programs such as the B-52 radar modernization effort, where contractor investment in cutting-edge systems remains tied to sustained government commitment and procurement volume.

The IISS findings do not suggest that Russia or Western nations are on the verge of losing their dominant positions in the global arms trade in the near term. However, the analysis indicates that the comfortable duopoly those blocs once exercised is eroding, and that the pace of erosion is likely to accelerate as emerging producers gain experience and refine their export strategies.