Turkish Defence Offsets: What Does a Buyer Actually Get?

Almost every large Turkish export package now arrives with an industrial offer attached — local assembly, technology transfer, a joint venture, sometimes a factory. What a buyer actually receives ranges from nothing at all to a complete warship design. Across the ten best-documented cases, the hardware has broadly turned up on schedule and the industrial half has slipped by years. Kazakhstan took four years to turn an ANKA assembly memorandum into a joint venture and still has not named a site. Pakistan went from licence-building corvettes to contracting a frigate of its own design. The most useful question a buyer can ask is not how much technology is promised. It is who will own the plant.

Türkiye wrote a strict offset rulebook — for itself

The reason Turkish companies are comfortable talking about industrial participation is that Ankara spent three decades on the receiving end of it. Türkiye runs one of the more demanding offset regimes among mid-sized arms buyers, and unlike its export terms, that regime is written down.

The SSB published version 3.0 of its offset guideline in December 2022. In the legal comparison published by the Turkish firm Herdem, a foreign contractor selling into a Turkish programme signs an Offset Agreement with three possible headings: export-type offset, technological cooperation offset, and industrial cooperation, the last of which needs SSB approval. A Turkish contractor signs an Industrialisation Agreement instead, carrying a Turkish added-value obligation, a sub-industry and SME work-share obligation of at least 21% of contract value, an EYDEP work-share obligation under which at least 70% of that work goes to qualified SMEs, and a technology and product acquisition obligation worth at least 2% of the bid value.

The enforcement is the interesting part. Under the 2011 rules, a contractor that missed its obligation paid a flat 6% penalty at the end of the contract. Under the 2022 rules, shortfalls draw a 6% penalty per unmet portion in each 36-month programme period, escalate with interest, and can be carried into an extension of up to two years at the price of a 50% increase in the outstanding liability — with a final 25% penalty on whatever is still unfulfilled. Herdem’s worked example: a contractor missing US$100m of obligation owed US$6m under the old rules and can owe US$25m under the new ones.

Nothing equivalent exists on the export side. Türkiye does not publish the value of its defence export contracts, and it does not publish what it promises buyers industrially. Everything below is reconstructed from what customer governments, partner companies and the manufacturers themselves have said in public.

Four things “local production” can mean

The phrase covers arrangements that have almost nothing in common. Sorted by how much capability actually changes hands, the documented Turkish cases fall into four levels, plus a fifth category that gets called an offset in press coverage and is not one.

1. A promise on paper

The weakest form is a memorandum of understanding, or a contract clause conditioned on something that has not happened yet. Kazakhstan is the clearest case. Kazakhstan Engineering and Turkish Aerospace signed a military-technical cooperation memorandum in May 2022 covering an ANKA assembly line, maintenance capability, technology transfer and personnel training. The aircraft themselves were reported delivered by 2023. The memorandum did not become a joint venture until 14 May 2026, four years later, during a presidential visit to Astana — and no site or production timeline has been announced since. A fuller account sits in our page on which countries operate the ANKA and what each of them agreed.

Indonesia’s ANKA offset shows the conditional version. Jakarta contracted on 3 February 2023 for twelve aircraft worth US$300m, six of them to be assembled by PT Dirgantara Indonesia, with technology transfer, maintenance training and a national UAV centre attached. PTDI told Indonesian media in January 2025 that the offset activities were still waiting for the procurement contract to become effective. Aircraft deliveries began in late 2025; the local line has not.

2. Local assembly

One step up, the buyer’s plant puts together kits built in Türkiye. Value added in-country is real but shallow: jobs, facilities, maintenance capability and trained people, without the supply chain moving. Saudi Arabia sits here. Baykar signed with the Saudi Ministry of Defense in Jeddah in July 2023, and an agreement with Saudi Arabian Military Industries followed in August 2023 for AKINCI production in the Kingdom, with SAMI stating a target of up to 70% local content. Saudi crews completed training in October 2025 and Baykar said in August 2025 that production lines were being set up. No locally assembled aircraft has been announced.

3. Licence production

Here the buyer’s own company builds the platform under licence, pulls in local suppliers and keeps the industrial capability afterwards. Malaysia’s 257 AV-8 Gempita 8×8, built by DEFTECH on the FNSS PARS design, is the longest-running example. Hungary is the newest: 106 Gidrán 4×4 have been delivered since 2020, and in March 2026 Nurol Makina agreed to produce 800 more in Hungary, with the vehicles built at Rába in Győr and integration work continuing at Kaposvár.

4. Design rights

The deepest level is rare anywhere in the arms trade, and Türkiye has done it once at scale. The 2018 Pakistan corvette contract put two of four Babur-class hulls in Istanbul and two at Karachi Shipyard & Engineering Works, with ASFAT — the Turkish defence ministry’s own company — as prime contractor. Naval News reports that the contract also carried provisions for the transfer of design rights and construction know-how from Türkiye to Pakistan. The test of whether that worked came in November 2025, when the Pakistan Navy contracted KS&EW to build the lead Jinnah-class frigate, a 3,300-tonne design produced jointly by the Navy’s own Platform Design Wing and ASFAT. Pakistan did not just get ships. It got the ability to specify and build the next ones. Our guide to who builds Türkiye’s warships sets out how ASFAT and the yards divide that work.

The category that is not an offset

Increasingly, “local production” in a Turkish deal means the Turkish company buys or builds the factory itself. Romania is the largest example: after contracting in November 2024 for 1,059 COBRA II vehicles worth about RON 4.26bn, Otokar acquired 96.77% of Automecanica S.A. and its 140,000 m² plant at Mediaș for roughly €85m, completing in June 2026. The first twelve Romanian-built vehicles were accepted by the Romanian defence ministry on 30 July 2026. The plant, the jobs and the tax base are Romanian; the ownership is Turkish. The same pattern appears in Egypt, where MKE registered Zafer, a wholly owned Egyptian-law company, announced on 10 September 2026, and in Ukraine, where Baykar’s own plant near Kyiv — struck four times in six months to August 2025 — is company investment rather than a customer entitlement.

This is foreign direct investment, and for a host government it can be better than an offset: it comes with the supplier’s capital and the supplier’s incentive to keep the line running. It is worse in one specific way. If the relationship sours, the buyer does not own the tooling.

The record, case by case

Ten documented cases, with what was promised set against what is publicly verifiable as of September 2026.

Compiled by DefenceTürkiye from customer-government announcements, manufacturer statements and the sources listed at the foot of this page. Türkiye publishes no export contract values or offset schedules; every figure here originates with a buyer, a partner company or the manufacturer.

Local production is not the cheap option

Buyers sometimes assume that moving assembly in-country lowers the bill. On the published evidence it does the opposite. Oman’s 172 PARS III 8×8, built in Türkiye, were reported at around US$500m, close to US$2.9m a vehicle. Malaysia’s 257 AV-8 Gempita — the same PARS lineage, built in Malaysia under licence — were contracted at about RM7.5bn, near RM29m each. The configurations and the years differ, so this is not a clean comparison, but the direction is not in dispute, and Malaysia’s own Auditor-General has published scrutiny of the programme’s cost. A buyer paying for a national industrial capability should expect to pay for it. The buyer-side economics of Turkish armoured vehicles are set out in more detail separately.

What is not published

Honest reporting on this subject has to state its limits. Türkiye publishes no export contract values, so every price in this article comes from a buyer’s budget documents or from reporting. No Turkish offset percentage offered to a foreign customer has ever been published. Neither SSB nor the companies disclose offset performance, meaning there is no way to say from open sources how much of the Indonesian or Saudi industrial package has been delivered. Where a Gulf customer is involved, the buyer publishes nothing either, and the record goes dark entirely. The cases above are the ones that can be checked; they are not a representative sample of Turkish export practice, they are the transparent minority of it. How far Turkish industry is genuinely self-sufficient is a related question handled in our assessment of Türkiye’s defence production independence.

What to watch next

Four events would move this picture materially. The first locally assembled Saudi AKINCI would convert the largest announced Turkish drone package from a training-and-facilities story into a production one. The first Hungarian-built Gidrán out of Győr would make Hungary the second European production base for a Turkish vehicle. The start of PTDI’s ANKA line would close a gap that has now run for more than three years. And the Nigeria track — where both governments agreed in August 2026 to move from buying Turkish hardware to manufacturing it locally — will show whether the model travels to a market without an established defence-industrial base. For the contracting and financing machinery underneath all of this, see our guide to how countries actually buy and pay for Turkish weapons.

Readers who want the bilateral context in Turkish will find Envanter Medya’s anatomy of the Pakistan–Türkiye defence-industrial partnership and its account of the Saudi relationship from licensing to joint production useful as relationship histories; neither treats offsets as a cross-country question, which is what this page does.

FAQ

Does Türkiye require offsets when it buys weapons?

Yes. The SSB administers an offset and industrialisation regime whose current version 3.0 guideline dates from December 2022. Foreign contractors sign an Offset Agreement; Turkish contractors sign an Industrialisation Agreement carrying local-content, SME work-share and technology-acquisition obligations, with escalating penalties for shortfalls.

Does Türkiye publish what it offers buyers in return?

No. Offset terms in Turkish export contracts are commercial and undisclosed. Everything publicly known comes from customer governments, partner companies or the Turkish manufacturers themselves.

Which Turkish export deal transferred the most technology?

The 2018 Pakistan Babur-class corvette contract, which included provisions for transfer of design rights and construction know-how. Pakistan subsequently contracted Karachi Shipyard in November 2025 to build the Jinnah-class frigate, co-designed by the Pakistan Navy’s Platform Design Wing and ASFAT.

How long does the industrial half of a Turkish deal usually take?

Longer than the hardware. Kazakhstan took four years to move from memorandum to joint venture. Indonesia’s ANKA offset was still waiting on contract effectiveness two years after signature, while aircraft deliveries went ahead. Romania is the fastest documented case: contract November 2024, factory acquired June 2026, first locally built vehicles accepted July 2026 — and that was achieved by the Turkish company buying the plant.

Is local production cheaper?

Generally not. Malaysia’s licence-built AV-8 Gempita cost substantially more per vehicle than comparable Turkish-built exports of the same family. Local production buys industrial capability, not a discount.

Does a local plant mean the buyer owns the technology?

Not necessarily. In Romania, Egypt and Ukraine the plant is owned by the Turkish supplier, not the customer. Assembly rights, manufacturing rights, maintenance rights and design authority are separate things and should be separately specified in the contract.

Do Turkish transfers remove foreign export-control exposure?

Only partly. Engines, transmissions, turrets and some electronics in Turkish platforms are imported, and those components stay subject to their own supplier country’s rules whatever Türkiye transfers.

Sources

• Herdem Attorneys at Law, Recalibrating defence offsets in Türkiye: a legal comparison of the 2011 and 2022 offset guidelines
• Presidency of Defence Industries (SSB), Industrial Participation / Offset
• Naval News, Pakistan Navy inducts 2nd Babur-class corvette, PNS Khaibar, April 2026
• PT Dirgantara Indonesia, company news on the ANKA contract and offset status, January 2025
• Baykar, Turkish drone-maker Baykar signs major export deal with Saudi Arabia
• European Security & Defence, Baykar signs deal with SAMI for Saudi AKINCI production
• The Defense Post, Nurol Makina to produce 800 Gidrán vehicles in Hungary, March 2026
• Defence Industry Europe, Otokar completes Automecanica acquisition and prepares Romanian production of COBRA II
• Ministerul Apărării Naționale (Romania), acceptance of the first locally built COBRA II vehicles, 30 July 2026
• Jabatan Audit Negara Malaysia, Auditor-General’s Report on the AV-8 Gempita programme
• Kazinform / Kazakh Presidency, reporting on the Türkiye–Kazakhstan ANKA production joint venture, May 2026
• RBC-Ukraine and Ukrinform, statements by Baykar on the Kyiv plant and its reconstruction, 2025