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Volume 2024
Main headlines from this issue
Canadian Defence Policy Update released, ITB to apply to newly funded capabilities
The Canadian government released its Defence Policy Update (DPU), Our North, Strong and Free, on 8 April. The DPU builds on the 2017 document, Strong, Secure, Engaged (SSE), which outlined plans for projects and new investments amounting to CAD164bn (USD118bn) over 20 years. The Canadian government intends to update the DPU every four years.
Australian companies seek US collaboration under AUKUS alliance
Australian defence companies such as NIOA Group, EOS Defence Systems and 3ME Technology are aiming to expand their presence in the US market, underpinned by the increased opportunities for collaboration driven by the trilateral AUKUS defence partnership between the US, the UK, and Australia. Challenges over technology transfer, however, remain a concern for industry partners.
Finnish and Czech companies join F-35 supply chain
Two future F-35 Lightning II customers are being added to Lockheed Martin’s supply chain for the fifth-generation fighter aircraft as its deployment across Europe accelerates. Local industry partners in Finland and the Czech Republic have successfully obtained workshare as part of their respective F-35 procurements.
Indonesia to locally produce submarines with tech transfer
Indonesia’s state-owned shipbuilder PT PAL and France’s Naval Group will collaborate to boost the Indonesian Navy’s submarine capabilities. Indonesia awarded the contract to the Naval Group–PT Pal consortium on 28 March for the delivery and local production of two Scorpène-class submarines.
Turkish arms company to establish joint venture in Congo
Turkish arms company Ateşçi is investing in a Congolese joint venture with state-owned mining explosives company, Africaine d’explosifs (Afridex) for the local production of munitions of various calibres. A new ammunition production line will be installed at the Afridex site in Likasi, Democratic Republic of Congo, where production of Ateşçi's products is expected to begin in July.
Embraer collaborates with Chile on local production and MRO
Brazilian aerospace company Embraer announced the signing of two industrial and services cooperation agreements with Empresa Nacional de Aeronáutica de Chile (ENAER) on 11 April. The agreements have been signed for the A-29 Super Tucano and the C-390 Millennium aircraft. They cover the local manufacture of aircraft parts, as well as the establishment of a new service centre in Chile.
Main headlines from this issue
New Australian Defence Strategy while detailed, may be ineffective
The Australian government released its first-ever Defence Industry Development Strategy (DIDS) on 29 February. The strategy, essentially an internal review of the Australian Industrial Capability (AIC) policy, aims to provide recommendations and a detailed implementation plan to help grow Australia’s domestic defence industrial base. However, it has attracted criticism for failing to narrow down Australia’s defence priorities or define specific levels of local content in foreign procurements.
Local facilities set up in India despite tech transfer concerns
India has recently bolstered defence partnerships with international companies, Israel Aerospace Industries (IAI) and Brazil’s Taurus Armas S.A., both of which have launched entities and facilities in the country. These developments however, have materialised after facing challenges in securing technology transfers from foreign suppliers.
Romania demands offsets, attracts sole bid from Otokar
As Romania struggles to invite bids for its light armoured tactical vehicles (ATBTU) procurement, Rheinmetall is building a gunpowder factory in the country in collaboration with the European Commission.
Dutch submarine contract awarded to Naval Group attracts criticism
The Dutch government has provisionally selected French shipbuilder Naval Group to deliver its Barracuda submarines as part of the Netherlands’ Walrus-class replacement programme. The company will collaborate with Dutch shipbuilder Royal IHC to deliver a “renewed submarine capacity”.
Swiss industry reaps indirect offset benefits from F-35 procurement
Switzerland’s local industry will receive offset benefits as part of its procurement of 36 F-35A Lightning II aircraft. Mercury Mission Systems International SA announced on 21 March that it will be expanding on the manufacturing of defence technologies at its facilities in Geneva, in collaboration with Lockheed Martin. The collaboration, valued at CHF40m (USD45.6m), will particularly focus on embedded computing technologies.
Korean company outbids Western suppliers for Peruvian contract
Peru has selected South Korea’s Hyundai Heavy Industries (HHI) as its preferred partner for the local production of naval ships. The conglomerate will collaborate with Servicios Industriales de la Marina S.A. (SIMA), a local Government-owned shipyard, to build a frigate, a patrol vessel, and two landing ships for the Peruvian Navy.
Main headlines from this issue
No offsets for Germany or EU, but no alternative strategy either
“Offset, in general, is harmful; it hurts competition [and] doesn’t drive innovation in the defence industry,” Lutz Holländer, acting head of the German Federal Ministry of Defence’s (BMVg) Defence Industrial Base, said in his presentation at DKF’s spring conference in Berlin. “But we acknowledge the fact that it is there and it's strong and kicking, despite all efforts to abolish it.”
EU releases first defence strategy ahead of DKF
The European Commission released the European Defence Industry Programme (EDIP) on 5 March, a strategy that builds on the European Defence Technological and Industrial Base (EDTIB) to support “greater competitiveness, responsiveness and resilience” in the EU over the next decade. Presenters at the DKF spring conference offered their view on the changing landscape of defence in Europe, and the role of offsets in the region.
Ukraine expands collaboration with European defence firms
Ukraine is progressively expanding its localisation collaborations with European partners as it continues to enhance its defence industry. Czechoslovak Group (CSG) is currently negotiating with UDI on the creation of joint ventures for ammunition production. Meanwhile, Rheinmetall announced plans to establish at least four new production plants in the country. Additionally, other German and French suppliers have also revealed partnerships with Ukrainian counterparts, particularly in drone and ground equipment.
Saab builds manufacturing unit in India with 100 percent FDI
Saab has received approval from the Indian government to make a 100 percent foreign direct investment in the country for the local production of its Carl-Gustaf M4 weapon systems. Saab started the construction of a manufacturing unit in Jhajjar, Haryana, on 4 March. Production of the weapon systems is scheduled to commence next year.
EDGE and INDRA to set up JV for radar production in the UAE
EDGE Group and INDRA announced on 4 March the signing of a joint venture agreement for the development and manufacturing of radar systems in the UAE. The Abu Dhabi–based JV will have access to a non-NATO, non-EU pipeline of orders of nearly 300 advanced radar solutions valued at EUR2bn (USD2.2bn).
Plausible Japan collaboration with AUKUS invites criticism
Earlier this month, the members of the trilateral security partnership AUKUS, invited Japan to collaborate with them on the development of future defence technologies. On 2 March, the US discussed with its AUKUS partners the possibility of inviting Japan to collaborate. If the collaboration were to proceed, Japan would be the first country invited to work in the AUKUS framework.
Main headlines from this issue
UK releases new procurement strategy, but no concrete procurement plans
The UK MoD released a new defence procurement strategy on 22 February, developed in collaboration with defence practitioners and industry stakeholders. Under the strategy, the MoD aims to enhance collaboration and innovation across uncrewed systems for its armed forces.
Turkish defence suppliers secure deals with KSA
Turkish defence suppliers Ramsa Defence, Havelsan, and TAI have secured deals with the Kingdom of Saudi Arabia (KSA) against the backdrop of the WDS. Concurrently, new information was released regarding agreements signed between SAMI and Baykar last year.
Northrop signs eight offset projects with Poland for WISLA Phase II
Phase II of Poland’s WISŁA programme will begin following the Polish Ministry of National Defence and US defence prime Northrop Grumman signing an offset agreement encompassing eight projects collectively valued at approximately USD75m. Under the agreement signed on 20 February, Northrop will transfer technology to Polish industry, which will then manufacture, integrate, and test components of the IBCS systems.
Slovakia begins local production of Patria vehicles
Slovak engineering company CSM Industry has successfully begun the local production of Patria 8x8 armoured vehicles through a transfer of technology. Apart from CSM, over 40 Slovak companies are slated to participate in the project. The contract involves a 43 percent local industry participation level.
Ukraine signs localisation agreements with German partners
Ukraine recently signed several industry cooperation agreements with German companies during the Munich Security Conference. Agreements were signed with Dynamit Nobel Defence (DND) to cooperate on anti-tank weapons, with MBDA Deutschland to explore air defence collaboration opportunities, and with Rheinmetall to establish a joint venture focused on ammunition production in Ukraine.
KNDS and Leonardo to deliver ‘Italianised’ Leopard Tanks
Italy is embarking on a 14-year project to develop an ‘Italianised’ version of the Leopard tanks. The Leopard 2A8 procurement programme involves the purchase of 132 tanks from KNDS. Leonardo is the local partner under the USD9bn deal and will manufacture the tanks at its facility in La Spezia.
Main headlines from this issue
New US industrial strategy emphasises four priority areas
The U.S. Department of Defense released its National Defense Industrial Strategy (NDIS) on 11 January 2024. This strategy document will guide the DoD’s engagement, policy development, and investment over the next three to five years. Separately, the DoD’s Defense Innovation Unit (DUI) released its “DUI 3.0” strategy on 7 February.
Korean defence suppliers secure Saudi contracts at World Defense Show
Making the most out of WDS 2024, South Korean arms manufacturers Hanwha Aerospace and Hanwha Systems, Kia Corporation, Hyundai Heavy Industries (HHI) and LIG Nex1 have secured deals with the Kingdom of Saudi Arabia.
Lockheed and Boeing awarded Australian aircraft support contracts
Australia has awarded three support and maintenance contracts amounting to AUD830m (USD540m) to Lockheed Martin and Boeing for its fleet of Black Hawks, Apaches, and Chinooks.
Progress on US drone sale to India after diplomatic delays
The USD4bn General Atomics MQ-9B drone sale to India is finally moving forward. The sale received approval from the U.S. State Department on 1 February after a hold-off in December because of diplomatic concerns. GA has been informed of the sale, following the completion of the State Department’s “tiered review”.
Damen signs civil offset partnership with South Africa
Holland’s Damen Shipyards Group signed a strategic partnership agreement (SPA) with South Africa’s Department of Trade, Industry, and Competition (DTIC) as part of the National Industrial Participation Programme (NIPP), South Africa’s civil offset programme. Damen Shipyards Cape Town (DSCT) will work on localisation and industrial participation to the benefit of the South African shipbuilding industry.
Rheinmetall and Airbus expand local partnerships in Romania
European primes Rheinmetall and Airbus are expanding their local involvement in Romania. While Rheinmetall has acquired a majority stake in Romanian vehicle manufacturer Automecanica Medias, Airbus has extended its partnership with Industria Aeronautică Romană (IAR) on its H215M helicopters.
Main headlines from this issue
Brazil incentivises local content in new Industrial Policy plan
The Brazilian government has announced a new industrial policy plan for the next decade that focuses on national development and innovation, and includes a procurement policy that incentives local content. Brazil’s National Council for Industrial Development (CNDI) handed over the New Industry Brazil document to President Luiz Inacio Lula da Silva on 22 January.
Russia offers UAVs with offset benefits to the Middle East
Rosoboronexport is looking to export its UAVs, and has extended an offset heavy offer in the form of local production facilities and MRO services to its customers in the Middle East.
India collaborates with French companies on helicopter and jet
France and India are working towards enhancing their partnership for the second time in a year. India’s TASL has signed an agreement with Airbus to establish a local FAL for the H125 helicopters. Concurrently, India and France have signed a defence-industrial partnership roadmap, and Safran is offering a technology transfer for the domestic production of the Shakti engines for India’s future fighter jet project.
Indonesia and Korea collaborate amidst technology theft allegations
While Indonesia tries to enhance its economy and industry through collaborations with South Korea, the latter has announced an investigation into Indonesian engineers, accusing them of stealing technologies related to the KF-21 fighter jet project.
GDLS led ‘Power Team’ consortium wins Canadian Army contract
General Dynamics Land Systems Canada was picked as the preferred bidder for the Canadian Logistics Vehicle Modernisation programme on 10 January. GDLS Canada will lead a ‘Power Team’ of industry consortium, consisting of Marshall Canada, Mercedes-Benz, Manac, and Soframe, to provide the vehicles to the Canadian Armed Forces.
British subsidiary of KNDS wins Army’s bridge equipment contract
The British government has signed a USD189m contract with the UK wing of Franco-German defence conglomerate, KNDS. The UK subsidiary, previously known as WFEL, will supply new bridging equipment to the British Army. Announced on 25 January, the contract will support 300 skilled jobs and will be delivered through the company’s facilities in Stockport.
Main headlines from this issue
Colombia introduces new offset policy after 15 years
Colombia’s new offset policy, the "Sectoral Policy for the Implementation of Industrial and Social Cooperation Agreements-Offset", came into effect in October 2023. Adopted under Ministerial Resolution 4322 of 23 October 2023, the new policy supersedes CONPES 3522 (enacted in 2008) and repeals in its entirety Ministerial Directive No. 26 of August 2011.
Defence offsets worth USD 7 billion discharged in India
As of 2024, India has accrued over USD7bn worth of defence offsets according to a Business Standard report published on 16 January. That figure had been USD2.9bn in March 2020, according to a Standing Committee on Defence (SCoD) report published that month. CTO spoke to two defence experts in India to understand the developments and the scope of offsets there.
Romania to provide MRO services for Europe’s fleet of Black Hawks
Lockheed Martin has opened its first MRO service centre for the S-70 Black Hawk helicopter in Europe. The centre in Bacau was inaugurated on 18 January in Romania, in collaboration with aeronautical manufacturing company Aerostar S.A.
Lithuania signs defence contracts with European partners
Lithuania has signed several agreements involving local industry participation in recent weeks. The country is collaborating with Ukraine to explore potential joint projects, and four domestic companies have signed letters of intent with Ukroboronprom for joint development and production. Lithuania also signed an agreement with the Netherlands for the procurement of Thales Ground Master 200 Multi-Mission Compact radars.
UK promises long-term defence support for Ukraine
The UK signed a treaty with Ukraine on 12 January to help the country localise the production of defence equipment. UK Prime Minister Rishi Sunak signed the UK-Ukraine Agreement on Security Cooperation with Ukrainian President Volodymyr Zelenskyy to establish “an unshakeable hundred-year partnership”.
Australian production of Lockheed missiles to begin in 2025
Australia will start locally manufacturing Lockheed Martin’s Guided Multiple Launch Rocket System (GMLRS) missiles from 2025. The country announced on 16 January that it had signed an AUD37.4m (USD24.6m) contract with Lockheed Martin Australia. The contract includes a transfer of technology from the US.
Main headlines from this issue
Romania to set up agency for industrial cooperation
The Government of Romania approved an emergency ordinance on 4 January to establish the Romanian Agency for Technological and Industrial Cooperation for Security and Defense (ARCTIS). The government is considering ways to regulate industrial cooperation operations to develop Romania’s national defence industry.
Us–India technology transfer for jet engine underway
The process of transferring technology for GE Aviation’s F414 INS6 engines to India is underway. The fighter jet engine deal announced last year is making timely progress, GE Aerospace Defense Systems' president and CEO Amy Gowder told the Economic Times. A detailed technical proposal to set up a manufacturing unit in India will be shared with HAL.
Rheinmetall to integrate turrets onto Lynx KF41 IFVs in Hungary
Rheinmetall Hungary signed a contract with the Hungarian Defence Forces for the integration of the Skyranger 30 air defence turret onto the Lynx KF41 IFV on 15 December 2023. The future Lynx vehicle on which Rheinmetall Air Defence AG’s Skyranger system will be integrated, will be the eighth variant of the KF41.
Spain signs three defence contracts with localisation benefits
In an attempt to increase its domestic defence capabilities, Spain signed several contracts last month with foreign suppliers, all of which include localisation benefits. Under these agreements, Spanish industry will cooperate on Airbus’ C295 aircraft, MBDA’s Mistral 3 missiles and rocket launchers based on Elbit Systems’ Precise & Universal Launching System (PULS).
Missiles co-developed with IAI to be installed on Singapore’s frigates
The Republic of Singapore Navy has selected Israel Aerospace Industries’ Blue Spear anti-ship surface-to-surface missiles for installation on its fleet of six Formidable-class frigates. IAI developed the weapons system in cooperation with ST Engineering. The company is reported to have carried out the design, development, and production of the booster motor and warhead for the missiles.
Nigeria turns to US firm for weapons production line
In an attempt to boost its domestic defence industry, Nigeria is collaborating with US military firm, NEANY, to establish weapons production lines at the Defence Industry Corporation of Nigeria (DICON). This collaboration was announced by the Nigerian MoD after minister of state for defence, Dr Bello Matawalle, concluded a two-day visit to NEANY’s US facilities.
Volume 2023
Main headlines from this issue
Thai procurement of frigates will face domestic challenges
A white paper recently published by the Royal Thai Navy (RTN) lists a requirement for up to four new frigates over the next 14 years as the first of its six most important programmes. An estimated budget of THB80.4bn (USD2.28bn) has been allotted to the frigate programme, which Thailand wants to produce locally. CTO speaks to two industry experts to explore these developments and how Thailand can navigate the procurement of these frigates.
US Congress passes AUKUS submarine tech transfer bill
After months of negotiations, the US Congress officially passed the USD874bn 2024 National Defense Authorization Act (NDAA) on 14 December. The bill includes the legislation which enables the transfer of two US Navy Virginia-class submarines to the Royal Australian Navy in 2032 and 2035 under the SSN-AUKUS boat programme.
Australian industry builds alliance to support AUKUS submarines
Babcock Australasia, Bechtel Australia and shipbuilding company, Huntington Ingalls Industries (HII) will collaborate to support Australia for the AUKUS nuclear submarine programme. The companies signed an MoU on 18 December to identify ways to develop a skilled workforce, nuclear infrastructure design and build, submarine defueling and decommissioning, and nuclear waste and material management.
Team SkyGuardian to deliver RPAS Systems to Canada
Canada signed a contract with General Atomics Aeronautical Systems, Inc. (GA-ASI) on 19 December for the procurement of 11 MQ-9B SkyGuardian Remotely Piloted Aircraft Systems (RPAS). The project is expected to generate approximately 700 jobs annually and contribute USD97m to Canada’s GDP over the next decade. A new ground control centre will also be built in Ottawa to support RPAS operations.
GCAP makes headway, UK chosen as programme headquarters
The Global Combat Air Programme’s (GCAP) International Government Organisation (GIGO) will be headquartered in the UK. This decision was announced following the signing of an international treaty during the GCAP Trilateral Defence Ministerial held in Tokyo on 14 December. Under the treaty, GIGO will be led first by a Japanese CEO, with the role expected to rotate among the three partner countries.
Upgraded Russian-origin jets to have 78 percent Indian content
Hindustan Aeronautics Limited (HAL) will upgrade and boost the indigenisation of 84 of the Indian Air Force’s (IAF) fleet of Russian-developed Sukhoi Su-30MKI aircraft following approval by the Defence Acquisition Council (DAC) on 30 November. The project aims to bring the first tranche of 84 of the fighter jets to 78 percent indigenisation.
Main headlines from this issue
ITB Policy Annual Report : Canada to continue focusing on SMBs
Innovation, Science and Economic Development Canada (ISED), the Canadian government’s offset agency, published its Fall 2023 Industrial and Technological Benefits (ITB) Policy Annual Report on 6 December. The report highlights the economic and innovation impacts of ITB obligations that were active in 2022.
Canada picks Poseidon as CMMA winner, “disappoints” Bombardier
Boeing’s P-8A Poseidon aircraft was announced as the winner of Canada’s Multi-Mission Aircraft (CMMA) project for the Royal Canadian Air Force. A foreign military sales (FMS) letter of offer and acceptance for up to 16 aircraft was signed between the two parties on 30 November.
Peru and Rheinmetall sign offset agreement after eight-year delay
The Peruvian Ministry of Defence signed the Specific Agreement on Industrial and Social Compensation (Offset) with German prime Rheinmetall MAN Military Vehicles GesmbH on 24 November. Under the agreement, the two parties will collaborate to repower the facilities, logistics, and capabilities of the Peruvian Army’s Armored Maintenance Center (CEMABLIN).
Embraer expands presence through its C-390 aircraft
Brazilian aerospace manufacturer Embraer has secured several MoUs as part of its C-390 Millennium programme by expanding its presence and seeking collaboration with multiple partners. South Korea has selected Embraer’s C-390 Millennium as its new military transport aircraft; the Netherlands signed an MoU with the company to expand cooperation in the defence and security sector; and Saudi Arabia has established cooperation with Embraer in its aerospace industry.
TATA and Airbus establish defence supply chain partnership
India’s Tata Advanced Systems Limited (TASL) has announced a strategic partnership with Airbus S.A.S. in its attempt to strengthen the country’s defence supply chain. The partnership aims to introduce new products to the Indian market that align with the country’s defence needs.
Cranfield University joins Team Tempest for the GCAP
MBDA has announced a new partnership under Team Tempest for the Global Combat Air Programme (GCAP), which involves the UK, Italy, and Japan. MBDA will collaborate with Cranfield University to develop solutions to validate supply chain maturity. This collaboration will also be supported by Rolls-Royce.
Main headlines from this issue
New act to reform Nigerian defence industry
President Bola Tinubu signed the Defence Industries Corporation of Nigeria (DICON) Bill 2023 into law on 23 November, thus paving the way for reforms in the Nigerian defence industry. While DICON still exists, it will now function in a new and reformed manner.
India picks Strykers over indigenous AFVs
The United States and India have initiated discussions to co-produce the Stryker AFVs. A joint statement noted a “mutual interest to co-develop and co-produce ground mobility systems” in India. If this deal is finalised, India will be the first country to produce Stryker vehicles outside the US.
EDGE and SIATT collaborate on missiles
EDGE Group continues to build its presence in Brazil. It has secured a contract with the Brazilian Navy for the MANSUP-ER and its shorter-range version. Apart from the Brazilian Navy, EDGE will collaborate with local smart weapons and high-tech systems specialist Sistemas Integrados de Alto Teor Tecnológico (SIATT).
Hungary to produce Turkish armoured vehicles
Turkish defence manufacturer Nurol Makina signed an agreement with Hungarian company, Rába Automotive Holding and N7 Holding for the local production of the 4x4 Gidran armoured vehicle. The parties will establish a joint venture which will manufacture the vehicles in Győr.
Navantia forges partnerships for Corvette contract
Navantia Australia, a local subsidiary of the Spanish prime, is collaborating with Australian shipyard, Austal, and shipbuilding company, Civmec, to jointly offer six corvettes for the Royal Australian Navy.
Poland to produce CAMM-ER missiles with tech transfer
The UK arm of pan-European missile producer MBDA has signed an agreement with Poland’s Polska Grupa Zbrojeniowa (PGZ) for the local production of over 1000 Common Anti-Aircraft Modular Missiles Extended Range (CAMM-ER) and iLaunchers.
Main headlines from this issue
Peru struggles to establish long-term partnerships
Peru is planning to amend its offset policy to focus on developing more long-term partnerships with foreign suppliers rather than one-off transactions. The revised policy is expected to be finalised in the next six to seven months.
Oman is keen on downstreaming activities
Owing to limited capital and local infrastructure, Oman is focusing on associating itself with offsets through downstream activities. The country is open to and welcomes partnerships wherein local companies can become a part of foreign supply chains through downstreaming of systems.
Japan to partner with Australia for joint development
Mitsubishi Electric is setting up a joint development defence agreement with Australia to make equipment with “surveillance and survivability”, the Japanese company announced on 19 October. The agreement will involve a combination of Mitsubishi’s know-how in electronic and optical systems, and laser technology developed by Australia’s Defence Science and Technology Group.
Poland secures Kongsberg missiles with tech transfer
Norway’s Kongsberg Defence and Aerospace has secured two new contracts for Poland’s naval air defence systems. On 26 October, WZE and PIT-RADWAR – both part of the national conglomerate, PGZ — were selected to help manufacture and deliver Naval Strike Missiles (NSMs) and associated equipment to the Polish Navy.
Switzerland purchases PAC-3 missiles with indirect offsets
Switzerland’s local industry will benefit from indirect offsets, as part of its Patriot Advanced Capability-3 (PAC-3) Missile Segment Enhancement (MSE) guided missile purchase from the US. The Swiss Federal Office for Defence Procurement (armasuisse) signed a USD331m agreement with the US for the purchase of Lockheed Martin’s PAC-3 missiles. An offset agreement was signed as part of the contract signed on 30 October.
Raytheon and Rafael to produce Tamir missiles in the US
Raytheon will build a manufacturing facility in Arkansas, USA, with Israel’s Rafael Advanced Defense Systems to produce the Tamir missile and its US version, the SkyHunter, for the Iron Dome weapon system. The new facility is estimated to cost USD33m and will be established under the Raytheon-Rafael Area Protection Systems joint venture (JV).