"DIPRA acknowledges that there can be redundancy between what the private sector could be doing and the work of the state-owned enterprises (SOEs), and even empowers itself to dissolve SOEs on such grounds."
DIPRA's mandate: reform, manage, expand—and attract investment
Launched in June 2026, the Defence Industrial Production and Regulatory Authority (DIPRA) is tasked with reforming, managing, and expanding Pakistan's defence industry with an explicit aim to grow exports and the wider economy. Its charter, as reported, goes beyond program management: DIPRA explicitly recognizes overlap between state-owned enterprises (SOEs) and private-sector roles, and it has given itself the authority to dissolve SOEs where redundancy exists. One immediate objective cited in reporting is generating investment in the defence industrial base—especially through public-private partnerships (P3s).
Pakistan Ordnance Factories: scale-up toward upstream industry
Pakistan Ordnance Factories (POF) figures prominently in DIPRA’s early plans. As of the reporting, DIPRA has prioritized channeling P3 investment into POF. In August 2026 POF announced it was working to establish two new industrial plants intended both to support Pakistan’s defence needs and to drive exports. The organisation has been shifting or diversifying from small arms and ammunition manufacturing toward more upstream industrial activities, notably chemicals and polymers—moves the source describes as directionally aligned with where SOEs could most productively operate.
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Get a security leadPublic-private partnerships, SOE control, and the investor paradox
At the core of the challenge is a structural tension: legacy preferences to vest authority with SOEs—and by extension the military—continue to shape decision-making. The reporting warns this could be counterproductive when those same SOEs seek private capital. DIPRA is pursuing P3s as the main avenue for investment, and is inviting both domestic and foreign private investors. But vesting of authority in SOEs and lingering military influence is identified as a potential blocker to attracting sustained private-sector funding unless governance and incentive structures change.
Offsets as a tool: mechanics and a concrete example
One mechanism DIPRA and Pakistan appear ready to use is procurement-linked offsets: committing a share of foreign procurement spending to be executed, invested, or sourced within Pakistan. The reporting outlines the mechanics with a simplified example: if Pakistan procured 30 attack helicopters from Turkish Aerospace (TUSAŞ) under a hypothetical USD $1.5 billion contract, TUSAŞ might spend $500 million inside Pakistan to build an MRO (maintenance, repair, and overhaul) facility and a local R&D bureau. Those facilities could undertake first- and third-party work, returning hard currency flows to Pakistan and reducing the net foreign-currency outflow. The piece also notes that India commonly uses offsets in this way.
Applied to a real force-planning need, the reporting points to the Pakistan Navy’s (PN) requirement for a multi-mission helicopter to replace its Sea Kings—an acquisition potentially worth well over USD $1 billion. The argument advanced is that Pakistan could anchor such a deal to a commitment where over half the procurement value returns to Pakistan through investment, directing those inflows to targeted industrial growth such as chemicals, steel, alloys, or other upstream domains.
What this means for the Pakistan Navy, POF, and foreign OEMs
- Pakistan Navy (PN): The PN’s platform requirements—specifically a multi-mission helicopter to replace Sea Kings—serve as leverage for industrial offsets. The navy’s procurement choices could be used to shape domestic industrial capacity by tying acquisition contracts to local investment commitments.
- Pakistan Ordnance Factories (POF): POF is moving up the value chain into chemicals and polymers and has announced two new plants. The organisation is a primary target for DIPRA-driven P3s, and stands to receive foreign and domestic capital if governance and ownership arrangements are made attractive to investors.
- Foreign OEMs and investors (e.g., Turkish and Saudi interests): Quwa reports that Turkish and Saudi investors are interested in supporting POF’s growth. For original equipment manufacturers, procurement-linked offsets present both an incentive and a compliance obligation—spending inside Pakistan can be structured to reduce net foreign-currency outflows while anchoring local industrial capabilities.
DIPRA has opened an important window: it recognises redundancy between SOEs and private firms, it can dissolve SOEs in certain circumstances, and it is actively courting private and foreign capital through P3s and offsets. Quwa reports traction—with Turkish and Saudi investor interest—and early steps that appear to be building confidence. Yet the reporting leaves a pointed policy constraint visible in the facts: unless authority and governance arrangements change in ways that reassure private and foreign investors, the very legacy of SOE and military control that DIPRA inherits could blunt its ability to convert capital commitments into sustainable industrial capability.
