CTO Newsletter


News and analysis of offset and countertrade, twice a month, 24 times a year. Log in and search our archives to find the trade intelligence you need.

Our online database provides 24 months’ worth of issues. Researchers and long-term subscribers who would like to access older issues are welcome to reach out at subs@cto-offset.com.

Please note that the search bar does NOT recognise spaces. Please use _ instead. For instance, Saudi Arabia may be searched as Saudi_Arabia.

Volume 2024

 
23 February 2024
Volume 42, Issue 04

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.


09 February 2024
Volume 42, Issue 03

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.


26 January 2024
Volume 42, Issue 02

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.


12 January 2024
Volume 42, Issue 01

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

 
31 December 2023
Volume 41, Issue 24

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.


15 December 2023
Volume 41, Issue 23

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.


30 November 2023
Volume 41, Issue 22

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.


14 November 2023
Volume 41, Issue 21

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).


26 October 2023
Volume 41, Issue 20

Main headlines from this issue

Korea broadens discharge options amid tech transfer challenges

As technology transfer becomes increasingly more complex, South Korea is warming up to alternative forms of offset, according to Kim Seok, director of the Defense Industry Promotion Bureau at the Defense Acquisition Program Administration (DAPA).

PITC lobbies for offset law despite controversy

The Philippine International Trading Corporation (PITC) is lobbying to include the industrial participation policy into its procurement law, in the next year, Emmie Liza Perez-Chiong, the undersecretary, president and CEO of PITC, said at the GICA Conference.

UAE and Turkey sign 24 defence agreements to strengthen ties

Turkey and the United Arab Emirates are developing the cooperation between their defence industries. EDGE Group announced the signing of 24 framework agreements between the two countries during a defence industry event in Ankara on 11 October, hosted jointly by SAHA and EDGE. As part of these agreements, EDGE will set up an organisation in the UAE called MALATH.

India and Tanzania elevate ties to a 'strategic partnership'

India’s Jawaharlal Nehru Port Authority signed a memorandum of understanding with the Tanzania Investment Centre to establish an industrial park in Tanzania, while Cochin Shipyard Ltd. signed an MoU with Marine Services Co. Ltd. for cooperation in the maritime industry. The two countries have officially elevated their bilateral relationship to the status of a "strategic partnership".

Boeing opens new office in Indonesia

Boeing opened a new permanent office in Jakarta, Indonesia, on 4 October. On the same day, the company also signed an MoU with the Indonesian Directorate General of Civil Aviation (DGCA) to explore collaboration initiatives. The two parties will share knowledge in the realm of aviation, focusing on flight safety, efficiency, and sustainability.

Raytheon turns to local partners to secure UK's laser contract

Raytheon’s high-energy laser (HEL) system is arriving from the US this month, and Raytheon UK is partnering with local companies in an effort to secure the UK contract for a production-ready HEL weapon system. The company will integrate its weapon system onto British Army vehicles with the help of a local team.


12 October 2023
Volume 41, Issue 19

Main headlines from this issue

Switzerland makes progress on offset law

In addition to turning its offset policy into law, Switzerland is preparing to amend its core armaments policy before 2030, armasuisse representatives announced at the DKF Conference in Zurich.

Turkey's Roketsan wins Malaysian missile contract

Turkish missile maker Roketsan was awarded Malaysia’s missile contract for 108 Karaok anti-tank guided missiles (ATGMs) on 2 October. This is the first export contract for the Karaok system, which will be produced locally in collaboration with Ketech Asia. Additional procurements of the missile systems could follow the current order.

EDGE Group expands in Latin America, acquires 50% stake in Brazil's SIATT

In its continued efforts to establish a stronger presence in Latin America, UAE’s EDGE Group has acquired a 50-percent stake in Brazil’s SIATT. This collaboration will focus on the joint development and production of smart weapons and solutions for Brazil’s MANSUP missile project. The deal was officially signed at SIATT’s headquarters in Sao Jose do Campos on 29 September.

Czech Republic's procurement of F-35s focuses on industrial cooperation

Industrial cooperation is at the core of the Czech procurement of the F-35 aircraft from US prime Lockheed Martin. The government approved the purchase of 24 F-35s from the US on 27 September. Fourteen offset projects with Czech industry are already in place following negotiations with Lockheed Martin and Pratt & Whitney.

Rheinmetall to set up JV in Ukraine for MRO and joint production

The German Bundeskartellamt approved a joint venture between Rheinmetall and Ukraine’s state-owned Ukrainian Defence Industry group (UDI) on 28 September. The JV will be based in Kyiv and will focus on the development, production, assembly, and MRO services of military vehicles.

BAE Systems to begin design phase of AUKUS submarines

BAE Systems has received funding from the UK government to begin working on the detailed design phase of the SSN-AUKUS submarines, for use by the UK and Australia. The submarines will be built at its Barrow-in-Furness shipyard in the UK, and will incorporate technology from all three member nations.


27 September 2023
Volume 41, Issue 18

Main headlines from this issue

Saudi Arabia: headquarters requirement in doubt

Contrary to formal policy, OEMs looking to operate in Saudi Arabia do not need to establish local entities to secure contracts, local advisors tell CTO.

UK social values requirement in flux

Two years after it was first unveiled, the UK’s “social values” provision featured in nearly every British-themed panel at this year’s edition of DSEI [Defence & Security Equipment International 2023]. When probed on the topic, however, no industry representative could explain the provision’s scope or implementation.

GCAP yet to untangle workshare

The Global Combat Air Programme’s (GCAP) “biggest advantage” – workshare distribution – is precisely its “biggest challenge,” says Takamasa Iba, aircraft division director at the Acquisition, Technology and Logistics Agency (ATLA). The programme’s three partners – Leonardo, BAE Systems, and Mitsubishi Heavy Industries – have not yet finalised cost-sharing arrangements or the scope for modifications.

US and Ukraine agree to joint development, joint production

Ukraine and the United States have agreed to jointly produce weapons and co-develop new technologies. President Volodymyr Zelenskyy hopes to focus on the local production of air defence capabilities and job creation.

India requests 60 percent local content for Su-30 jets

Hindustan Aeronautics Limited (HAL) has confirmed it is prepared to manufacture and assemble over 60 percent of Sukhoi-30 jets in-country if an order is finalised with Russia’s Sukhoi Aviation Corporation (SAC). In addition to the aircraft, HAL would also develop related ground systems at its facility in Nashik, Maharashtra.

Vietnam: experts call for reforms in tech transfer policies

Vietnamese officials are debating new regulations which would relax R&D restrictions and incentivise technology transfer. Despite growing offers for technology transfer, local suppliers are struggling to keep pace with collaboration and are stifled by excessive red tape, according to experts.


13 September 2023
Volume 41, Issue 17

Main headlines from this issue

Korea releases component list with “offset potential”

DAPA, the agency responsible for South Korea’s military procurements, has published this year’s “prospective list” of technologies it would like OEMs to purchase from Korean suppliers as a form of offset.

Japan: OEMs nudged towards local partners

Japan may not yet be ready to systematise industrial participation, but defence contractors are still expected to partner with local suppliers to secure contracts in the country, industry experts tell CTO.

Korea offers to buy back Polish robotics

Defense Korea partnered with Polish state-owned research institute Łukasiewicz–PIAP to showcase robotics technology and optical nano-sensor explosive detectors at MSPO 2023 (5–8 September).

Hanwha pitches production centre for Canadian submarines

Hanwha Ocean has announced that it will build its first submarine production centres in North America as part of its efforts to secure a contract for up to 12 Canadian submarines, including MRO.

Raytheon rolls out offset for first-ever export of LTAMDS

Poland’s order for 12 Lower Tier Air and Missile Defence Sensors (LTAMDS) will see Raytheon partner with five Polish industry partners to “components and subassemblies,” a spokesperson tells CTO. The collaboration will build on the industrial participation projects from Phase I of the WISŁA programme.

Thailand to review countertrade policy

Thailand’s new defence minister, Sutin Klungsang, intends to “reform” the country’s arms procurement policy to make countertrade policies more “flexible,” the official told Thai outlets. Any weapons procurement plan will have to be accompanied by a deal to import agricultural products from Thailand.