Saudi arabia Country Commercial Guide
Learn about the market conditions, opportunities, regulations, and business conditions in saudi arabia, prepared by at U.S. Embassies worldwide by Commerce Department, State Department and other U.S. agencies’ professionals
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Defense & Security
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Overview

Saudi Arabia is ranked as the fifth-largest defense spender in the world in 2023 behind the United States, China, Russia, and India. Saudi Arabia’s 2025 budget allocated $72.5 billion to defense spending – approximately 21.2 percent of its total budget. According to the Stockholm International Peace Research Institute, Saudi Arabia historically imported nearly 80 percent of its arms from the United States.

Under the Vision 2030 economic diversification program, Saudi Arabia aims to localize 50 percent of its military procurement by 2030 under the aegis of two military industrial bodies: The General Authority for Military Industries (GAMI) and Saudi Arabian Military Industries (SAMI), which contracts directly with foreign companies. Currently, domestic defense content has reached 19.35 percent. The company’s goal is to become one of the top 25 defense company by 2030, citing foreign partnerships and joint ventures as a route to rapid growth of the firm and the Saudi local defense industry as a whole. Though Saudi Arabia has legislation addressing defense procurement, in practice, most defense procurement is not formalized and instead is negotiated on a case-by-case basis.

Key Saudi Arabian Defense Entities

  • Ministry of Defense (MOD): MOD is responsible for Saudi Arabia’s national security. It includes the Royal Saudi Land Forces, the Royal Saudi Air Forces, the Royal Saudi Naval Forces, the Royal Saudi Air Defense Forces, and the Royal Saudi Strategic Missiles Forces. The Institute of Strategic Studies estimates that there were roughly 277,000 people serving across Saudi Arabia’s military branches.
  • General Authority for Military Industries (GAMI): GAMI, established in 2017, is the regulator, enabler and licensor of Saudi Arabia’s military industries sector. GAMI proposes new policies, strategies, and regulations that are relevant to the military industry and complementary sectors. It also provides final approval for localization agreements related to military procurement of all defense platforms and services, not just for the MOD, but also for other government agencies, such as MOI and the Saudi Ministry of National Guard.
  • Saudi Arabian Military Industries (SAMI): SAMI is a state-owned defense company launched in May 2017 by Saudi Arabia’s Public Investment Fund to provide military products and services in Saudi Arabia and to reduce the country’s reliance on foreign purchases of military products. It operates across aeronautics; land systems, including military vehicles; weapons and missiles; and defense electronics.
  • Ministry of the National Guard (SANG): SANG defends Saudi Arabia’s land, borders, sanctities, and properties and maintains internal security and stability.
  • Saudi Arabian Royal Guard (SRG): SRG is a unit in the Saudi military forces. Originally an independent military force, the Royal Guards were incorporated into the Armed Forces.
  • Presidency of State Security (PSS): PSS is a Saudi Arabian security body created in 2017 that maintains counterterrorism forces, forces for the protection of critical infrastructure, domestic intelligence services.
  • Ministry of Interior (MOI): MOI is responsible naturalization, immigration, and customs in Saudi Arabia, and is one of the entities charged with the Kingdom’s national security.
  • General Authority for Defense Development (GADD): GADD is responsible for research, development and innovation at the intersection of defense and technology.

National Military Industries Sector Strategy

GAMI’s National Military Industries Sector Strategy is comprised of three pillars: Military Acquisition, Military Industry, and Military Research & Technology. These pillars are designed to drive the strategic priorities of strategic autonomy, military readiness, sustainable local military industry, interoperability within and across entities, and transparency and efficiency of spending.

Defense Budget

According to the 2025 budget released by the Ministry of Finance, Saudi Arabia will allocate $72.5 billion in 2025 – approximately 21.2 percent of its total budget – to defense of the Kingdom and its sovereignty. This significant allocation to defense comes as part of Saudi Arabia’s Vision 2030 goals and requirements to localize 50 percent of government spending in the defense sector.

The 2025 military budget funds 17 government bodies with priorities such as developing the capabilities of the Royal Saudi Land Forces (RSLF), Royal Saudi Air Forces (RSAF), Saudi Armed Forces, Royal Guard, and the National Guard. Priorities include enhancement of military capabilities, development and localization of military industries, providing medical services through military hospitals, increased military research, education and training in military universities, and operation and maintenance of facilities, bases, and military cities. Specific projects of note include construction of facilities at King Salman Airbase, relocation and establishment of King Faisal Air Academy, the modernization of the Ministry of the National Guard, and continued localization of 50 percent of defense procurement expenditures.

U.S.-Saudi Arabia Security Cooperation Relationship

Saudi Arabia is the United States’ largest foreign military sales (FMS) customer. The United States maintains $129 billion in FMS cases with Saudi Arabia.

Doing Business in Saudi Arabia’s Defense Sector

Saudi Arabia’s Procurement Law regulates all government procurement in Saudi Arabia. The Ministry of Finance is the overarching authority for the law and its implementation, and administers the procurement portal, Etimad (www.etimad.sa), which serves as a centralized repository for all government tenders. While companies may find defense-related tenders on the Etimad Portal, the Saudi Arabian Government allows direct purchases in the defense and security sectors. In practice, most defense procurements are negotiated on a case-by-case basis. Although entry points into the defense sector exist via various portals, such as the Saudi Ministry of Investment (MISA), Bureau of Industry, MOD, SAMI, and GAMI, the government by-laws aim to establish GAMI as the central point of defense article procurements in the coming years.

U.S. companies should be aware that the new localization requirements are onerous and unlike the previous “offset” program that was often established upfront as a future cost. Localization requirements must now be agreed to up front. U.S. companies that can leverage localization requirements to their advantage, sometimes via cooperation with other U.S. defense companies, stand to benefit from these new requirements. As localization increases and U.S. companies find themselves in potential contractor/sub-contractor roles, they will need to be vigilant about International Traffic in Arms Regulations (ITAR). ITAR puts the onus of enforcement and compliance on the U.S. company, not on the Saudi company.

U.S. defense companies who wish to establish a defense manufacturing presence or a service company in Saudi Arabia must obtain the required licenses from GAMI to fully operate in the Saudi market. However, most companies elect to have a local partner or establish a joint venture. Unlike in other non-defense sectors in Saudi Arabia, one of the challenges that foreign firms face when doing business in Saudi Arabia is the legal prohibition on paying commission fees to agents for the sale of military equipment to Saudi Arabian Government agencies (Council of Ministers Resolution no. 1275). However, U.S. companies can engage a local Saudi Arabian agent and comply with this law by offering such agents payment of success fees comprised of fixed onetime payments each time a contract is awarded, or by hiring the agent as an employee and remunerating the agent through an adjusted salary scale.

Another path for entry in Saudi Arabia’s defense sector is via establishing a joint venture company with a Saudi partner. SAMI is the lead government agency for the establishment of joint ventures. Most recent joint ventures entailed the local partner focusing on business development and winning government contracts while the foreign partner manufacturer established production lines.

The Saudi Arabian Government is increasingly pushing foreign investors towards forming a local LLC or other business organization in Saudi Arabia with a Saudi partner as a condition to winning government contracts and requires foreign companies to publish an industrial development plan that fulfills localization requirements. In many cases, GAMI and SAMI provide a list of terms that they wish to see incorporated in the articles of association of locally formed entities. As of 2024, all international companies are limited in doing business with the government unless their regional headquarters are located in Saudi Arabia. However, companies pursuing tenders not contained within the Etimad Portal, such as within GAMI’s Military Industry Marketplace, should verify requirements with the relevant authority. For more information, please refer to Doing Business with the Public Sector.

Those wishing to start a business in Saudi Arabia must obtain the appropriate license from the Ministry of Investment, in cooperation with the Ministry of Foreign Affairs and the Ministry of Commerce. In addition to licensing by the Ministry of Investment, companies must also ensure they have the appropriate GAMI permits and licenses. To increase the number of licensed local and international companies operating in Saudi Arabia’s defense sector, GAMI has streamlined its permitting and licensing processes, and now allows foreign companies 100 percent ownership of foreign investments. As of December 2024, GAMI had issued a total of 572 new licenses to local and foreign defense companies with a growth of 20 percent from the previous year. According to GAMI, localization in the defense sector stands at 19.35 percent with a target of 50 percent by 2030. To apply for a military industrial license, visit licensing.gami.gov.sa.

In August 2021, GAMI launched its Military Industry Marketplace, an online platform designed to help connect companies that have been authorized and licensed by GAMI to work in the military sector. The platform lists opportunities for registered users, to help with the identification of work required and the transfer of workshare and technology. To access the portal, visit GAMI’s website.

Industrial Participation Program

GAMI launched its Industrial Participation Program (IPP) in 2019 as the successor of Saudi Arabia’s Economic Offset Program. The IPP aims to expand the local military industries sector’s base in value-added sectors; provide a network of services and technical support for the sector; stimulate strategic partnerships with international companies in the sector; facilitate technology transfer; support SMEs and ensure their participation in the local supply chain, and to develop trained professionals capable of working in specialized industries. In May 2022, GAMI announced the establishment of the National Academy for Military Industries, which aims to train national cadres to join the Kingdom’s defense industries workforce and advance localization targets.

Opportunities

GAMI is focusing its localization efforts on land-based systems as they are generally easier to produce and can be sped up/slowed down in accordance with cash flow. Air and air defense will remain a GAMI priority with especially strong demand for aircraft parts. According to the Ministry of Finance’s 2025 budget, key projects include the development of Prince Sultan Cardiac Center, construction of facilities at the King Salman Airbase, the relocation and establishment of the King Faisal Air Academy and the modernization of the Ministry of the National Guard. According to Arab News, the authority’s ambition to localize more than 50 percent of Saudi Arabia’s defense expenditure has led to a supply chain localization program identifying more than 70 investment opportunities in the defense sector. According to U.S. credit ratings company Fitch Solutions, moving forward in 2025, there will be strong Saudi demand across all segments of the industry to support with the Kingdom’s goals for localization, including for ground and air equipment, naval and air defense capabilities, cybersecurity, C4ISR equipment, UAV capability and Counter-UAS, aircraft engines, tactical communications systems, MRO capabilities, rotorcraft capabilities, military fixed-wing aircraft, and structural component manufacturing. 
Ministry of Defense launched its platform for manufacturing opportunities (Edamah), which aims to support the private sector to localize the spart parts industry and explore development opportunities.

Resources

  • Saudi Ministry of Defense
  • Saudi Ministry of Interior
  • General Authority for Military Industries
  • Saudi Arabian Military Industries
  • General Authority for Defense Development
  • U.S. Commercial Service Saudi Arabia

Exhibitions

  • World Defense Show (2026)
  • Association of the U.S. Army
  • DSEI (Defence and Security Equipment International)
  • Dubai Air Show (2025)

For more information, contact: hesham.alawad@trade.gov. 

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