Defense Industry

The Iranian army in a statement on 21 August 2019 underlined that the country's indigenized military industries have increased its defense and deterrence power against enemies. “Designing and manufacturing military equipment by the Armed Forces of the Islamic Republic of Iran, which have always been subject to continuous sanctions imposed by the enemies of the Establishment, not only has created deterrence against threats, but also has driven Iran to a favorable and influential point in the military and political equations of the region,” the statement said on the occasion of the Defense Industries day in Iran. It noted that August 22 is a symbol of self-confidence for the country which is now meeting most of its defense equipment needs by relying on domestic capabilities.

In a similar statement the same day, the Iranian defense ministry underscored the country's strong determination to increase its defense capacities as a deterrence against enemies. "The strategy of increasing the defense capacities with focus on achieving various and modern equipment in the ground, marine and aerospace (specially missiles) fields is still the strategy for the Armed Forces' future," the statement said. It added that the Iran-made weapons and equipment, specially the pin-pointing missiles, which have produced decisive security power in the region prevent any adventurism by the arrogant powers against Iran. The statement also underlined that Iran's defense industries have turned into a role model for the Islamic Resistance Front countries to produce power against enemies in proxy and terrorist wars and force them to flee from the war quagmires that these enemies themselves have made in the Islamic states, including Yemen.

Iran's modern defense industrial base was developed during the period of the Shah by an import substitution strategy, in which Iran would learn to produce, assemble, repair and maintain military equipment. The United States and the UK were principal suppliers of aircraft, armor, and small arms. Beginning in the mid-1970's, Iran signed co-production agreements for licensed manufacture of aircraft, helicopters, surface-to-air missiles, and computer and electro-optic equipment.

Four state-owned organizations constituted the main elements of the defense industrial base. The Military Industries Organization (MIO) was the main control center, and also produced small arms, rockets, mortars, and artillery. The Iran Aircraft Industries (IAI) focused on fighters, the Iran Helicopter Industries (IHI) on helicopters, and the Iran Electronics Industry (IEI) on defense electronics.

In 1963 Iran placed all military factories under the Military Industries Organization (MIO) of the Ministry of War. Over the next fifteen years, military plants produced small arms ammunition, batteries, tires, copper products, explosives, and mortar rounds and fuses. They also produced rifles and machine guns under West German license. In addition, helicopters, jeeps, trucks, and trailers were assembled from imported kits.

During the two decades ruling of Reza Shah, great significance were given to the creation of a classic strong army. An army that can serve the king in frontiers, national security and against political opponents .To fulfill the king’s ambitions, recruitment of all skilled workers in steel mills and metal workshops was the first step towards establishment of a repairing center , followed by commissioning of 18 persons to Europe to be trained in this profession. Gradually during 1922-1929 by bringing tools, equipment and samples from Europe, the factory was able to manufacture barrels, rifles and thousands rounds of bullets per day and produce necessary gunpowder in chemical factory .Thanks to the Germans , the Iranian ammunition manufacturing plant and the armament manufacturing plant were constructed under separate arrangements between 1935 to 1940 .Very soon contracts were signed with German manufacturers to transfer the technology to produce 75mm , 205 mm , 105 mm ammunitions. The brass plant though was built before 1940.

The Organization soon came into the conclusion that with its qualified staff, it should move torwards self-reliance and cover other sectors of the defensive products. In the sixties, vehicles, communication, battery producing and electronic parts and devices were the areas that the Organization was almost capalde to handle in all respects. In another sector, Iran Aviation Industries originally was constructed by Textron and intended to produce Bell 214 series, initially 350 helicopters plus transfer of technology. This project later was expanded enormously and US International Bell co. trained these personal that before 1977 well-trained staff were sufficiently capable to logistically support the fleet in the national army.

As the Pahlavi era ended in 1979, the Iranian post revolution inherited an immense amount of land air and naval war-machine , and due to the west’s hatred towards creation of a truly Islamic state in the Middle East , flamed the old disputes into eight-year –long war with the eastern neighbor. With systematic refusal of social and commercial relations as from the beginning of the revolution followed by a great degree of worsening sanctions, literally paved the way towards a bright future for the creative, active & capable nation to stand-up against all international & technological challenges .

Iran was on its way to manufacturing rocket launchers, rockets, gun barrels, and grenades, when the Revolution halted all military activities. The MIO, plagued by the upheavals of the time, was unable to operate without foreign specialists and technicians. By 1981 it had lost much of its management ability and control over its industrial facilities.

On the military power, the country necessarily had to be self-reliance by overriding all difficulties and restrictions. The nation with momentous ideals beside a revolution with propositions and message for the world to pursue, soon recognized its threats and opportunities. The Iranian military industries entered into a circumstance that had been dealt with prudence. Acquiring Eastern technology together with the existing Western know-how, increased the capability of the army much in a greater level among the countries in the region.

Throughout the years of the holy defense [the Iran-Iraq War], Iran was able, despite the all-embracing economic sanctions of the world, by utilizing the creativity, initiative, and self-control that Imam created in the presence of revolutionary youth, well out of the foe of the Ba'athist who brought all the superpowers backing. In this regard, the Organization of Self-Defense Jihad was established in the forces and the task of carrying out industrial research in the area of self-sufficiency and defending the equipment needs of the forces was entrusted to this organization.

During these years, jihad of self-sufficiency had always been the source of many charisma and blessings for this power. "Research based on the needs of the day", which was the central slogan in self-sufficiency organization Jihad, meant basing research on the threat of the enemy. In order to achieve this, the threats of foreign, transnational, regional and internal threats, along with the capabilities of the enemy, were constantly being monitored by Iranian experts and researchers, and what has been identified as a threat among their actions, research teams quickly are formed and begin to operate in that area. The designed of the structure and organization is in a matrix form, immediately formed by specialized research teams, and will never be captured by the structure and the classical organization.

The scope of the Organization of Self-Defense Jihad was very wide in the area of countering air threats at altitude, countering ground threats, confronting spy actions, and counteracting the devastating terrorism phenomenon that has been created by the global arsenal and Israel and with the deputy of some countries in the region.

Interaction of research centers was one of their common characteristics, because no single center can achieve significant success. Therefore, the Joint Research Council in the IRGC was composed of all organizations of self-sufficiency jihad. In this council, division of labor and joint projects were presented, and parts of the capabilities of an organization were placed at the disposal of another organization, so that in addition to completing each other's projects, solving problems and bottlenecks of technology will be undertaken. There were also offices in the self-affirmation Jihad organization to be devoted to attracting researchers, inventors and creative people who exist at the community level and among college students and can not run their own projects alone.

By 1990, there were over 240 factories and some 12,000 privately owned smaller concerns producing armaments, employing about 45,000 people. Although the Rafsanjani government, upon election in 1989, took steps to begin military modernization, it was the Gulf War that made it clear that a major modernization of both the armed forces and the defense industrial base was needed. It became apparent that during the period of time in which Iran was rebuilding her own defense industrial base to produce weaponry needed for the Iran-Iraq war, her neighbors were arming with much more advanced technology systems, mostly purchased from the West. Iran's air and naval forces were obsolete by comparison. Iran became committed to a strategy of defense self-sufficiency as an urgent national requirement. The objective of total self-sufficiency remains today. The benefits of self-sufficiency also include significant savings in hard currency, which is badly needed to retire Iran's very large foreign debt in order to help overall economic development.

When Rafsanjani was elected as president in 1989, efforts were initiated to consolidate the defense industries and management structure so as to provide a more workable capability than the two-track (Ministry of Defense, Ministry of IRGC) structure that had developed over the previous ten years. The IRGC ministry was dissolved. At the same time, expansion of the overall defense industrial base was initiated, using the technology transfer from imports as a main facilitator.

Another source of transformation was the end of the Iran-Iraq war. Since that time, many defense industries have been significantly underutilized, with some firms operating at only 10-15 percent of their production capacity. By the late 1990s the Iran defense industrial base comprised about 15-10 percent of the country's industry.

Defense conversion was one solution that was being tried, as well as the privatization of some of the state-owned companies to facilitate conversion. The Iran Electronics Industries, which is Iran's largest defense company, had 80 percent of its production capacity focused on commercial electronics products by the late 1990s. Commercial sales of radios, televisions, and cell phones have resulted in the tripling of the IEI sales volume over the three years from 1994 to 1997. Iran Aircraft Manufacturing Company, another leading defense industry, was still heavily focused on defense work, but is also looking for commercial opportunities. AMC started cooperative licensed production of a Ukrainian Antonov 140 dual-use transport aircraft.

Iran is one of a few nations that is trying to achieve a totally self-sufficient armaments capability. Iran has declared self-sufficiency in several critical areas. Besides small arms and artillery, these include armor, and selected naval systems. In May 1998, an official announced that Iran was self-sufficient in the production of armored equipment, achieved by "acquiring sophisticated technology in related fields." In late 1997, Iran's navy chief declared that the country was "full self-proficient" in "sea-warfare technology." The Iranian Navy is "manufacturing its own equipment and other essential items through the work of domestic experts and the naval research center."

Iran has also worked to become self-sufficient in the production of spare parts for weapon systems. In early 1999, the acting commander of the ground forces announced that Iran is now producing 14,000 various kinds of aircraft parts. The domestic manufacture of spare military parts has saved the equivalent of 30 billion rials in hard currency. Iran is also producing the clear majority of parts needed by its armed forces, an Iranian armed forces official announced in early 1997. The following year, the army's aviation wing produced 90 percent of its spare parts requirements. In 1999, Iran's Minister of Defense stated that Iran's defense industrial base is now capable of producing the "fundamental hardware" needed by Iran.

In 1991 Iran announced the first domestic production of ballistic missiles. Although Iran claims a significant degree of self-sufficiency in missile technology, there nevertheless appears to be heavy involvement of Russian, Chinese and North Korean technology.

Overall, Iran's defense industrial base includes industries providing aircraft servicing and manufacture, and the production of mini-submarines, missiles, vehicles, mortars, artillery, small arms, mines, multiple rocket launchers, and ammunition. Iran lacks strong technical expertise, and the absence of a well-developed industrial and research infrastructure has inhibited Iran from indigenously developing and manufacturing advanced armaments. This weakness has given impetus to the strengthening of Iran's electronics industry as a main pillar of the future defense industrial base.

Iran's economy deteriorated in the aftermath of revolution, collapsing oil prices, and war, that dictated greater state control over resources, means of production, and responsibility for domestic services. The situation has been aggravated by the population explosion. Internal deadlock in Iran between protectionist advocates vs. free trade proponents has made it difficult to move forward and to create funds for investment in technology and infrastructure. Arms imports have received significant expenditures to date. How long Iran will be able to continue its import-dependent armament strategy is an issue.

Iran fears economic and technological isolation from a world in which other distinct economic poles have developed that, with the exception of oil revenues, have resulted in little benefit to the Middle East. This has been a principal driving force in Iran's push toward self-sufficiency, and also to move to establish regional efforts to overcome the effects of isolationism.

Iran's armament strategy, coupled with its actual infrastructure capabilities, have created an armament situation with several internal contradictions. Indigenous capacity to produce lower technology weaponry has advanced. Iran is still import-dependent for advanced technology systems and their maintenance and may have a long-way to go before actually obtaining an indigenous capability for these systems. Ballistic missiles are a main focus, but still with help from abroad.

Etka Factories Organization is a major producer and supplier of the consumer goods and products mainly to the army personnel of the Islamic Republic. It also builds military facilities.

Iran’s Etka Factories Organization and the wholesalers Cooperative Company of Sri Lanka signed a cooperation agreement 17 June 2006. The agreement was reached following yesterday’s visit of Iran’s Etka Factories Company by Sri Lankan Minister of Trade and Commerce, Jeyaraj Fernando Pulle. During his visit of the company, Fernando Pulle was closely briefed on the organization’s potentials and its achievement in the production, economic and service sectors. The minister was in Iran to attend the 8th Iran and Sri Lankan Joint Economic Cooperation Commission.

ETKA does not produce arms but textile and food for the army. This is why it is open to contacts with Armenia and does not fear any complaints from Azerbaijan, one more economic partner of Iran. ETKA is the only big defense-related Iranian producer that has contacts with Armenia. In May 2016, ETKA’s CEO visited Yerevan and met with Armenian Defense Minister Vigen Sargsyan. On May 24-25, Armenia’s Deputy Defense Minister David Tonoyan visited Tehran and met with Iran’s Defense Minister Hossein Dehghan and his deputy Firouz Masihpour. He also visited the Malek-Ashtar University of Technology and the Center for Strategic Research. According to media reports, the sides outlined their future military contacts. In June, a delegation led by Armenia’s Deputy Defense Minister Movses Hakopyan paid one more visit to Iran. The Armenian guests visited ETKA’s factories and shops and met with its CEO Mehdi Karbala. The visit resulted in a memorandum of mutual understanding and a number of agreements that were kept secret.