For the fiscal year 2016, Defence-related expenses are predicted to amount to Y4.82 Trillion (US $44.2 billion) overall. More specifically, the budget includes Personnel & provisions expenses, at about Y2.15 Trillion, Obligatory outlay expenses, at some Y1.72 Trillion, and Future obligations concerning new contracts, at some Y2.08 Trillion. Also, the funds allocated for General Material Expenses have been raised by 0.3% (compared to FY2015), to some Y994.8 billion.

The Aerospace & Defence Industry in Japan is relatively small, when compared with other industries in the country. In 2012, the people employed in the local Aerospace Industry were 35,411. The last few years, the output of the Industry has steadily increased, expected to reach US $14 billion (current dollars), in 2016. About 50% of its total sales are categorized as defence-related products. According to Sipri Data (2014), Japan occupied the 7th position of the Arms-producing countries worldwide, accounting for $9.2 billion in arms-sales, followed by Israel and South Korea (ROK).

Japan does not have a state-owned ordinance factory, therefore most of the defence equipment and associated items manufacture, is covered by private local companies (specialized in the defence industry). Today, Japanese aircraft manufacturers, focus on the development of their own capability, as well as the production and maintenance of  a wide range of defence aircraft, such as fighters, transporters, patrol planes, trainers and search & rescue aircraft, which have thus contributed greatly to addressing national defence needs. Competing with overseas manufacturers, they can provide radar systems, digital control systems, actuators, valves and other types of equipment –including Power supply systems, Landing gear systems, simulators, etc. A key achievement for the Japanese A&D Industry, was the development of the XF5-1 engine that could compete on an equal basis, if not surpass, similar engines produced in the US and Europe. Moreover, applying state-of-the-art technology, local A&D companies participate in various international programs, through civil aircraft development –e.g. participating to such programs of Boeing (B767, B777, B787), Embraer, Bombardier (CRJ 700/900) and Airbus (A380)-, as well as through the manufacture of reputable fuselages, engines and various helicopter components. Finally, Japan operates as a worldwide supplier of advanced aircraft materials, including composites and titanium alloys (used in jet engines’ components).

In 2014, five Japanese companies were included in the SIPRI’s Top 100 Arms-producing and military services companies’ database. Moreover, Mitsubishi Heavy Industries and Kawasaki Heavy Industries –with Arms-sales turnovers of $3.9 billion and $2.1 billion respectively- have significantly improved their rankings, showing the potential of this Industry.

Japan Top arms-producing & military services  Companies

Arms sales, 2014

(US $ Bn.)

Total sales, 2014

(US $ Bn.)

Arm sales % (approx.), 2014

Total Employment, 2014

Mitsubishi Heavy Industries





Kawasaki Heavy Industries










Mitsubishi Electric Corp.










Source: http://books.sipri.org/

The technological advances incorporated in the locally manufactured defence products, have raised the production cost per unit, as well as the overall maintenance costs of associated equipment. Considering the fact that the ratio of Research & Development expenditure to defence-related expenditure has decreased (despite the global increasing trend) and that new security risks emerge daily, Japan is emphasizing the last few years, on the Transfer of Defence Equipment and Related Technology.

The MoD’s efforts are targeted to the deployment of efficient defence procurement processes, especially as far as domestic development, international joint development and production, licensed domestic production, the utilization of commercially produced goods and imports, that would directly affect defence production and the local technological base.

Since 1992, Japan has implemented numerous joint projects with the US, and more recently launched –for the first time with a nation other than the US- a joint project with the UK. Additionally, the Japanese-French Agreement concerning the Transfer of Defence Equipment and Technology, has led to the confirmation of a further cooperation between the two countries, in Africa and Middle East, as far as their fight against terrorism. Following the Japan-Australia Transfer of Defence Equipment and Technology Agreement signed in 2014, Japan was a strong contender for the major Australian Future Submarine Program that was eventually awarded to DCNS of France (in April of 2016). Finally, Japan has confirmed through 2+2 Joint Statements in 2015, the continuation of the cooperation for the mutual sharing of defence capacity, as well as knowledge and technology with the US and Australia. Also, at the beginning of 2016, Japan and the UK agreed upon the further cooperation between them, and particularly in the fields of maritime safety, maritime conservation, as well as cyber security.

In this respect and in order to maintain and strengthen its defence production and technological basis, Japan has focused on promoting measures for a long-term public-private partnership; this would allow the domestic industry to strengthen its international competitiveness, as well as to develop basic concepts regarding more efficient processes for defence equipment acquisitions –e.g. as far as domestic development (including the reduction of business costs and more effective project management), international joint development and production, and imports; improvement of procurement systems (e.g. use of single-tendering and longer-term contracts); and measures relevant to R&D.