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Volume 2025
Main headlines from this issue
UK suspends revised IP Policy, to revisit under new defence industrial strategy
After piloting its Revised Industrial Participation (IP) Policy for over a year, the UK has decided not to proceed further with officially introducing a revised version of its offset policy, for now. Instead, the UK may explore an alternative approach towards industrial participation through an Integrated Procurement Model (IPM). The UK is, however, still reflecting on the revised policy as part of developing its new Defence Industrial Strategy.
France and Germany set up JV for tank procurement
KNDS Deutschland, KNDS France, Rheinmetall Landsysteme, and Thales signed a shareholder agreement on 23 January to establish the Main Ground Combat Systems (MGCS) Project Company GmbH as a joint venture. The new firm will act as the prime contractor for the Franco-German MGCS project, which aims to develop a next-generation main battle tank.
Saudi Arabia expands cooperation with Italian firms
During a roundtable meeting in AlUla on 26 January, Saudi Arabia signed 26 MoUs with Italian defence companies, including Leonardo, Fincantieri, and ELT Group. Local signatories included Saudi Arabia’s Ministry of Investment (MISA), the General Authority for Military Industries (GAMI), SAMI Advanced Electronics Company (SAMI-AEC), and Shamal.
Turkey strengthens ties with Morocco and Saudi Arabia
Turkish defence firm Aselsan visited Morocco on 22 January to discuss potential collaborations in defence technology and the local production of arms to modernise and strengthen Morocco’s military capabilities. Separately, Turkey is boosting its ties with Saudi Arabia in hopes to increase exports to that country.
Thyssenkrupp set to win Indian submarine contract
German shipbuilder Thyssenkrupp Marine Systems (TKMS) and Indian defence public sector undertaking Mazagon Dock Shipbuilders Limited (MDL) have emerged as the sole contenders for India’s Project-75(I) under which six submarines are to be built locally for USD5.37bn.
Ukraine eyes co-production with France and Sweden
Ukraine has agreed to sign a bilateral agreement with Sweden, alongside expressing its interest in conducting joint production with France. The agreement with Sweden will support the implementation of joint defence industry projects, while Ukraine and France may jointly produce surface-to-air missile systems.
Main headlines from this issue
Ukraine amends procedure to develop and produce defence products
Ukraine adopted a resolution on 13 January to establish a mechanism that allows for the involvement of foreign companies in developing and modernising equipment for the Ukrainian Defense Forces. The resolution amends the procedure for developing and producing new types of defence products and establishes conditions for cooperation with foreign partners.
Local subsidiary to deliver Rheinmetall defence systems to Italy
Rheinmetall Italia, the Italian subsidiary of Germany’s Rheinmetall, will deliver a locally built Skynex air defence system to the Italian Army under an EUR73m (USD75m) contract. Rheinmetall Italia produces the Skynex system at its plant in Rome’s Tiburtina Valley and has previously built these systems for export to other Rheinmetall customers.
Pakistan to join Turkey’s KAAN fighter jet programme
Pakistan is officially on the path to joining Turkey’s KAAN fighter jet programme. The two countries are discussing the joint establishment and operation of a factory in Pakistan to produce a local variant of the fifth-generation jets developed by Turkish Aerospace Industries.
India to produce US drones with tech transfer
Indian drone manufacturer Avironix has announced a partnership with Lumenier to manufacture drones in India under a technology transfer agreement. The US firm will also help Avironix export its solutions to the US.
Peru begins construction of Korean naval vessels
South Korea’s Hyundai Heavy Industries and Peru’s state-owned shipyard Servicios Industriales de la Marina S.A. (SIMA), launched the construction of four advanced naval vessels for the Peruvian Navy on 10 January. The project involves a transfer of technology for the local construction of a frigate, a patrol vessel, and two landing ships for the Peruvian Navy.
Japan-Indonesia enhance defence ties, resume frigate co-development talks
Japan and Indonesia have agreed to enhance defence collaboration and will cooperate on technology transfer related to defence systems, alongside establishing a discussion forum for defence practitioners. Separately, the two nations agreed on 7 January to resume discussions for the joint development of naval vessels.
Main headlines from this issue
Canada’s ITB Policy takes centre stage at European conference
The DKF Autumn conference focused on the Canadian Industrial and Technological Benefits (ITB) policy. Presenters maintained a positive outlook on how Canada has designed its industrial participation policy and how Innovation, Science and Economic Development (ISED), the body that administers the ITB policy, works with foreign obligors.
GCAP partners to establish joint venture this year
The Global Combat Air Programme partners, the UK, Italy, and Japan, signed the terms of collaboration on a joint venture on 13 December in London. Efforts are on track to meet the aircraft’s scheduled in-service date of 2035. Industry partners, BAE Systems, Leonardo and JAIEC confirmed that they would hold equal stakes in the JV, which is to be established and named by mid-2025.
Ukraine begins licensed assembly of Czech rifles
Ukrainian Defense Industry (UDI) announced on 13 December that it had started assembling CZ BREN 2 rifles under licence from Česká zbrojovka, a subsidiary of the Czech Republic’s Colt CZ Group in November 2024. The cooperation involves a transfer of technology and future production of the rifles in Ukraine.
Embraer to cooperate with Portuguese industry on attack aircraft
The Portuguese Ministry of National Defence signed a contract with Brazil’s Embraer on 16 December for 12 A-29N versions of the Super Tucano light-attack aircraft to equip the Portuguese Air Force. Separately, soon after finalising the Tucano contract, Embraer set up its first European office, in Lisbon, Portugal, on 17 December.
Indra-Edge to set up radar joint venture in Abu Dhabi
The UAE’s EDGE Group and Spain’s Indra reached an agreement on 18 December to establish PULSE, a joint venture aimed at fostering local capabilities for the development and manufacture of radar systems. Indra will transfer technology to provide new radar capabilities to the UAE, alongside training and developing skilled local professionals.
US and India to jointly manufacture sonobuoys
US-based Ultra Maritime has partnered with India’s Bharat Dynamics Ltd. (BDL) to co-produce sonobuoys for undersea domain awareness. The two parties will supply and manufacture sonobuoys for the Indian Navy, with production split between the US and India. In India, BDL will carry out the co-production in Visakhapatnam.
Volume 2024
Main headlines from this issue
Switzerland to update Armaments Strategy
Switzerland will publish a revised Armaments Strategy in the summer of 2025. This will be followed by an update to pass the country’s offset policy into Swiss law in 2026. The updated law will merge new initiatives with existing policy and will include an ordinance and a directive containing further details related to the practice of offsets.
Denmark to update Defence Strategy, enhance industrial cooperation
Denmark will update its National Defence Industrial Strategy in 2025 and will look into how its industrial cooperation (IC) guidelines can be made more effective for Danish companies. Furthermore, the country will allow foreign companies to complete projects in Ukraine to fulfil their IC obligations to Denmark.
Canadian ITB Policy Report “insufficient”, says Auditor General
ISED, the Canadian government’s offset agency, published its Fall 2024 Industrial and Technological Benefits (ITB) Policy Annual Report on 26 November. The following week, the Office of the Auditor General of Canada published an audit reporting that ISED does not sufficiently monitor the costs or benefits of the ITB policy.
Latvia to continue local production of Patria vehicles
The Latvian MoD signed a follow-up contract with Finnish prime Patria on 14 November for the delivery of 56 armored vehicles under the Common Armoured Vehicle System (CAVS) programme. Defence Partnership Latvia SIA, a joint venture between Patria and the local firm SIA Unitruck, manages local production at the Valmiera facility.
Kongsberg to supply RAS systems for Indian ships
Kongsberg Maritime has partnered with Hindustan Shipyard Ltd. (HSL) to supply electric replenishment-at-sea systems for the Indian Navy’s Fleet Support Ships project. The Norwegian company will provide its technology related to the systems to be fitted on the five vessels being built locally by HSL and Larsen & Toubro.
Poland secures funding for Hanwha contracts after delays
The Polish Armament Agency has finally secured funding to procure additional Chunmoo multiple rocket launch systems and K9 howitzers from Hanwha Aerospace. On 27 November, Poland reached a USD4.2bn credit arrangement with the state-owned Bank Gaspodarstwa Krajowego to finance the purchases.
Main headlines from this issue
DoD representatives explain US approach towards offset, could revisit policy
Dean Vlahopoulos, principal deputy general counsel, and Jorge Aguilera, weapons policy analyst, both from the DSCA, maintained that the US viewed offsets as "inefficient and market-distorting”, at the same time admitting the irony in its involvement in administering offsets, when domestic industry indulged in such transactions. However, Vlahopoulos remarked that there is a “new sort of wind” in the US, propelling a new look at offsets.
Malaysia focuses on offset output, moves away from value-based approach
Malaysia has moved from a credit value–based industrial collaboration policy to an outcome-based one. Under the new approach, Malaysia will not measure the offset projects in terms of its credit value but, rather, on the outcome the project creates for its local industry.
Korean primes sign defence agreements with Peruvian industry
South Korea and Peru have signed several MoUs to enhance bilateral defence industry collaboration. Hyundai Heavy Industries and Peru’s state-owned shipyard, SIMA, signed an MoU for joint submarine development, while Korea Aerospace Industries signed an MoU with SEMAN, for the joint production of KF-21 fighter jet components. Furthermore, Hyundai Rotem signed an agreement with Peru’s Army Weapons and Ammunition Factory to strengthen cooperation on ground equipment.
India and Japan to co-develop UNICORN antennae
India and Japan inked a Memorandum of Implementation on 15 November in Tokyo to jointly develop Unified Complex Radio Antenna (UNICORN) masts for the Indian Navy. Once implemented, the agreement will be the first case of co-development and co-production of defence equipment between India and Japan.
Embraer boosts industrial cooperation with Dutch industry
Embraer established partnerships on 21 November with Fokker Services Group, the Royal Netherlands Aerospace Centre, and Multisim to enhance its industrial and research cooperation relating to the Netherlands’ procurement of the C390 Millennium aircraft.
Rheinmetall wins Canadian vehicle contract
Germany’s Rheinmetall has won a USD232m contract to supply the Canadian Armed Forces with 85 HX 8x8 heavy recovery vehicles under Canada’s Enhanced Recovery Capability project. An additional in-service support contract, worth USD21m, has also been awarded to the German prime.
Main headlines from this issue
Korea revises offset guidelines to support its SMEs
Korea’s Defense Acquisition Program Administration revised the country’s Offset Trade Guidelines on 29 October to help foster its small and medium-sized enterprises (SMEs) and help them enter global supply chains.
Australia signs local production contracts with Thales and Lockheed Martin
Australia is boosting the local production of weapons under its Guided Weapons Explosive Ordnance Enterprise. The Australian government announced on 30 October that it had selected France’s Thales to construct a domestic forging capability for the production of artillery ammunition and that Lockheed Martin would establish a facility for the local manufacture of Guided Multiple Launch Rocket Systems.
Competitive tender could delay India’s fighter jet programme
The Indian government is deciding between a government-to-government contract or a multi-vendor and competitive tender process for the procurement of 114 Multi-Role Fighter Aircraft for the Indian Air Force. To avoid a “Rafale-like controversy” related to the contract, India is considering adopting a “transparent procurement method” for the deal.
Thailand to produce Swedish solar cells
Swedish defence prime Saab and solar energy firm Midsummer AB signed an MoU on 4 November to explore a long-term partnership and industrial cooperation in Thailand. This is part of Saab’s adherence to Thailand’s offset policies which demand benefits for its defence industry and economy against foreign purchases.
Boeing and Safran to set up local facilities in Morocco
Morocco will establish local aerospace R&D and MRO facilities in partnership with US prime Boeing and France’s Safran Aircraft Engines under agreements signed at the Morocco-France Entrepreneurial Meeting in Rabat on 28 October and during the Marrakech Air Show on 30 October–1 November.
Rheinmetall to set up joint venture in Croatia
Germany’s Rheinmetall announced a strategic partnership on 28 October with Croatian manufacturer of unmanned ground systems (UGS) DOK-ING to develop and market advanced UGS solutions. Separately, Croatia will procure Leopard tanks from Germany at a discounted price, against the delivery of used tanks and IFVs to Ukraine.
Main headlines from this issue
India and US seal drone deal after eight years of negotiations
India has finally concluded a USD4b agreement with the US for the procurement of 31 MQ-9B high-altitude long-endurance drones manufactured by General Atomics. The deal was signed on 15 October, alongside a contract to establish an MRO facility for the unmanned aerial vehicles in India.
Brazil to enhance its defence industrial base
Brazil’s Ministry of Defense signed a strategic partnership agreement on 8 October with the National Industry Observatory, under the National Confederation of Industry. The cooperation agreement is valid for six years and aims to strengthen Brazil’s defence agenda and identify opportunities for its Industrial Defense and Security Base in domestic and export markets.
Saudi Arabia steers aerospace collaborations
Saudi Arabia has expressed an interest in the purchase of over 100 of Turkey’s indigenously developed and built KAAN fighter jets. The potential collaboration could include technology transfers and support for local production of the jets. Subsequently, Saudi Minister of Industry and Mineral Resources Bandar Alkhorayef met with Italy’s Leonardo to discuss expanding relations between the two parties.
Turkey’s Otokar wins Romanian vehicle contract
Romania has awarded Turkey’s Otokar its USD934m light armoured vehicles programme contract for the Cobra II 4X4 vehicle. Under the agreement, the first 278 out of 1,059 vehicles will be produced at Otokar’s facilities in Turkey. The remaining units will be manufactured in Romania in cooperation with local companies under a framework that is yet to be determined.
UK, Germany sign defence agreement to boost joint production
The UK and Germany will strengthen long-term defence industry cooperation under an agreement signed on 23 October. The agreement outlines joint production opportunities and proposes plans for Germany’s Rheinmetall to open a new factory in the UK.
Pending approvals delay delivery of KAI aircraft to Poland
Poland is facing delays in the delivery of 36 FA-50PL combat aircraft from Korean Aerospace Industries, as the US has yet to provide legislative approvals for components requested on the aircraft by Poland.
Main headlines from this issue
Boeing to pay Embraer $150m for abandoning aviation deal
As a result of withdrawing from a proposed aviation deal in April 2020, Boeing will pay Embraer a gross amount of USD150m. The collaboration began in July 2018, when Boeing and Embraer signed a Master Transaction Agreement (MTA). The conclusion of the arbitration process was announced on 16 September.
Dassault Aviation goes solo in setting up MRO venture in India
Dassault Aviation is independently setting up an MRO subsidiary in India, after reports in July suggested that it was abandoning its partnership with Reliance Defence on the project. The new venture, Dassault Aviation MRO India (DAMROI), will focus on providing tailor-made support products and services for India’s fleet of Dassault fighter aircraft such as the Rafale and Mirage-2000.
Ukraine advances defence co-production with European firms
Ukraine plans to launch development and production projects with European partners as it focuses on developing local manufacturing capabilities for ammunition and drones. Local firm Ukrainian Armored Vehicles (Ukrainian Armor) will collaborate with the Czech holding Czechoslovak Group (CSG), while Ukraine expects to launch co-production with Slovakia’s Way Industries, and the Netherlands will invest in drone development with the country.
Offsets to contribute €1bn to Dutch submarine project
Industrial cooperation will generate EUR1bn for the Dutch maritime industry against the supply of four submarines to the Royal Netherlands Navy. The Netherlands signed a delivery agreement with France’s Naval Group on 30 September covering the procurement.
Saab to open tenth facility in the US
Saab is partnering with the State of Michigan to establish a USD75m facility for the local production of munitions in Grayling. Saab’s investment, announced on 24 September, will create 70 local jobs. Once open, the factory will conduct final assembly and integration of shoulder-fired munitions and precision guided systems.
Korea to purchase Polish weapons for the first time
The South Korean Ministry of National Defense signed a deal with Poland on 2 October to purchase Warmate 3 Kamikaze drones, marking Korea’s first weapons purchase from Poland. The agreement was finalised with Polish defence firm WB Group’s subsidiary, WB Electronics, during the Korea Army International Defense Exhibition held in Gyeryong on 2–6 October.
Main headlines from this issue
Peru releases updated offset-related definitions
The Peruvian Ministry of Defense (MINDEF) released a supreme decree, the Ministerial Resolution No. 00960-2024-DE on 11 September, to modify its existing General Directive No. 018, which regulates offsets in Peru. The decree is expected to be approved by the end of this year. The three-page document clarifies that new definitions of “Industrial Cooperation” and “Industrial Participation” need to be included in the Peruvian offset policy.
Turkish firm to localise operations ahead of UK Army tender
Nurol Makina has opened a new facility in the UK through its local subsidiary, Nurol Makina UK (NMS UK). The facility in Tachbrook Park, Leamington Spa, will focus on producing protected patrol vehicles for both the UK and for export. The UK facility is expected to employ up to 150 people, and will form part of NMS UK's phased approach to increase the UK-based content of its vehicles to more than 50 percent.
Northrop to transfer tech to Lithuania for IFV ammunition
Northrop Grumman signed an MoU with Lithuania’s MoD and Ministry of Finance on 23 September, formalising its intention to support Lithuanian industry in producing medium-calibre ammunition for Infantry Fighting Vehicles. Under the MoU, Northrop will share with Lithuania technologies related to advanced manufacturing expertise. The US prime is also negotiating the establishment of a local production line and a joint venture for its 30mm-calibre ammunition.
Ukraine to produce Czech weapons with local content
In an attempt to increase its presence in Ukraine, Czech arms supplier AKM Group-CZ has opened a representative office in Kyiv. The office, registered on 27 August, marks the company’s fourth representative office in the world outside of the Czech Republic.
Thales Australia to facilitate rifle production in Denmark after decades
Lithgow Arms, a subsidiary of Thales Australia, and Denmark’s Våbenfabrikken have announced a strategic cooperation to establish a new Danish industrial capability. The two sides signed an MoU on 17 September which will enable Denmark to locally manufacture military assault rifles for the first time since the 1960s.
PTDI to reassemble and customise Airbus helicopters for Indonesia
Indonesia has ordered four Airbus H145 helicopters as part of a training modernisation programme for the Indonesian Air Force (IDAF). Airbus signed an agreement with the IDAF and PT Dirgantara Indonesia (PTDI), under which the Indonesian firm will manage reassembly and will complete integration of the mission equipment alongside other customisation work at its facility in Bandung.
Main headlines from this issue
Potential ITAR amendment could “maximise innovation” among AUKUS partners
The US State Department published an Interim Final Rule (IFR) on 20 August to amend the International Traffic in Arms Regulations (ITAR) in order to further facilitate defence trade between the three AUKUS countries. The IFR introduces a licence exemption for the majority of defence trade conducted between the three partners and is designed to “harness and maximise the innovation power” residing in their defence industrial bases.
Offset requirements leave single bidder for UK’s helicopter contract
Leonardo Helicopters has emerged as the sole bidder for the UK’s ongoing New Medium Helicopter requirement after Airbus Helicopters and Lockheed Martin subsidiary Sikorsky withdrew from the competition ahead of a 30 August deadline, both citing an inability to meet offset requirements.
Australia to become maintenance hub with new aircraft hangar
A four-bay aircraft hangar for the local maintenance of Australia’s fleet of Boeing 737 military aircraft is being constructed in Adelaide. South Australian urban development agency Renewal SA, the principal contractor, has appointed BESIX Watpac as the design and construction contractor for the Deep Maintenance and Modification Facility adjacent to the Royal Australian Air Force (RAAF) Edinburgh Base, a BESIX Watpac spokesperson told CTO.
Local shipbuilder to construct Colombian frigate with tech transfer
The Netherlands’ Damen Shipyards Group and Colombian state-owned shipbuilder COTECMAR have inked a deal to construct Colombia’s first indigenously built frigate. Under the contract signed on 11 August, Damen will transfer technology and provide technical support and components to COTECMAR.
KNDS to transfer ground defence technology to Indonesia
Franco-German defence company KNDS Group has pledged to transfer knowledge and technology to Indonesia to enhance its defence sovereignty. The transfer will be related to ground defence and will include medium- to large-calibre ammunition.
China’s Norinco signs tech transfer and training deal with Mali
Chinese defence contractor China North Industries Corporation (Norinco Group) has signed a cooperation deal with the Malian Ministry of Defense and Veterans Affairs to provide transfer of technology, military equipment, and training in defence to the West African country.
Main headlines from this issue
Supreme Court of Canada issues decision on 2008 offset dispute
The Supreme Court of Canada has issued a decision relating to letters of credit associated with an offset dispute case between Canada’s Bombardier and the Hellenic Ministry of National Defence. The offset dispute is linked to Greece’s purchase of ten firefighting amphibious aircraft from Bombardier in November 1998.
Poland’s WISŁA Phase II progresses with local production contract
RTX’s local subsidiary, Raytheon Polska, signed an agreement with Huta Stalowa Wola S.A. (HSW) on 12 August to produce 48 M903 launchers for six Patriot air defence batteries in Poland. HSW will act as a subcontractor to Raytheon for the delivery of the systems to the Polish Armed Forces.
Kongsberg to establish missile factory in Australia
Norway’s Kongsberg will build a facility in Australia to manufacture and maintain its Naval Strike Missile (NSM) and Joint Strike Missile (JSM), through a transfer of technology. Backed by an AUD850m (USD576m) investment from the Australian government, the facility will be the first outside Norway to produce these weapons.
Turkey and Spain discuss jet swap
Turkey and Spain have reached an advanced stage of negotiations over a military aircraft swap. If finalised, Turkey will acquire Airbus A400M military jets in exchange for its domestically produced Hürjet training aircraft. The potential swap deal is valued at around EUR720m (USD793m).
TATA to establish vehicle manufacturing plant in Morocco
Indian defence manufacturer Tata Advanced Systems Limited (TASL) has completed all administrative procedures and entered the implementation phase to establish a military vehicle manufacturing plant in Morocco. To this end, Tata has established a new entity in Morocco called Tata Advanced Systems Maroc Construction.
Kazakhstan localises oil and gas production
Kazakhstan is planning to localise three oil and gas production facilities this year in collaboration with global manufacturers. The Central Asian country is focusing on increasing local content in oil and gas equipment to support and promote domestic manufacturing and local suppliers.
Main headlines from this issue
India amends Defence Acquisition Procedure to provide opportunities for startups
India’s Defence Acquisition Council approved amendments to the Defence Acquisition Procedure (DAP) 2020, which will be reviewed after one year. The amendments include changes in costs, payments, and procurement procedures to include Micro, Small and Medium Enterprises and startups in bidding processes to promote technology procurement from them.
India to buy additional Scorpénes with 60 percent indigenous content
The Indian Navy will acquire three additional Scorpène-class submarines from France’s Naval Group. The French prime will partner with Bharat Electronics Limited to integrate an indigenous combat management system into the submarines. The new submarines will be built locally by Mazagon Dockyards Limited with 60 percent Indian content.
Local industry to build radar components for Spanish frigates
Lockheed Martin awarded purchase orders to Spanish companies to build components for its SPY-7 radar on 24 July. The US prime is collaborating with Indra Sistemas, Escribano Mechanical and Engineering, and the Institute of Marine Sciences on the radars that will be fitted on Spain’s F-110 frigates, which are being built by Navantia.
Boeing fulfils ITB commitment in Canada through indigenous firm
Boeing has awarded Canada’s Indigenous-owned COTA Aviation, an investment of USD9.4m for the construction of a manufacturing training centre. This forms part of Boeing’s wider USD44.5m investment in British Columbia, as part of the US prime’s Industrial and Technological Benefit commitment to deliver the P8 Poseidon Aircraft to the Royal Canadian Air Force.
Malaysian firm to upgrade Hanwha’s K200 vehicles
Hanwha Aerospace has signed a teaming agreement with Malaysia’s Cendana Auto to upgrade their ageing K200 tracked IFVs. The Malaysian Ministry of Defence said that the contract, announced on 2 August, would include a technology transfer to support Malaysia’s MRO capabilities in armoured vehicles.
Future Leopard tanks to involve Czech industry
The Czech Republic will receive an additional 14 Leopard 2A4 tanks and one Büffel 3 armoured vehicle from Germany. The Czech MoD plans to sign an industrial cooperation agreement with KNDS later this year to ensure local industry involvement in the development, production, and lifecycle management of these tanks.