EARLIER this year, I wrote that Pakistan’s hostile geography denies it the luxury to choose between a well-funded military and economic growth. The only way through, therefore, is to make defence spending economically productive by opening the sector to private firms. I have since then been introduced to the state’s attempt at doing just that.
The vehicle is the Defence Industrial Production and Regulatory Authority, created by an ordinance in June. DIPRA absorbs the Ministry of Defence Production and places the entire defence industry, state factories and private firms alike, under a single regulator. The aim is to spur indigenisation, pull private firms into a space hitherto monopolised by the state, and to turn a cost centre into an exporting industry. At a recent seminar on the subject, defence officials engaged the private sector with unprecedented openness. Private is equal to public, they said. Come and register, and you sit at the same table.
This initiative deserves praise as a sector long closed to outsiders is being deliberately opened. However, the ordinance is merely the skeleton. Its substance has been left to rules and regulations not yet written, and it is there that the reform will succeed or fail. Three questions matter enormously.
The first is the intellectual property regime, which will heavily influence any private investment decision. The ordinance does two things. It vests all IP funded by the authority exclusively in the authority, and it deems IP arising from joint ventures and partnerships to be ‘work for hire’. The second provision needs careful attention.
The aim is to pull private firms into the defence space.
‘Work for hire’ is a doctrine of American copyright law. But copyright and patents are different systems protecting different things. Copyright protects expression. A patent protects the invention itself; the functional solution to a technical problem. Defence IP is overwhelmingly patents, designs and technical data. So when new technology is developed inside a joint venture, the question that matters is who owns the patent, and ‘work for hire’ cannot answer it, because it is a copyright rule lying across patent territory. Either the provision is ambiguous, or it is read as vesting every invention in the authority. Neither reading will attract a private partner, and neither is how mature systems handle this.
The American example itself separates ownership from usage rights. The contractor keeps title in virtually every case, and the state takes a licence whose breadth depends on who funded the work. Where government paid for everything, it takes unlimited rights. Where funding was mixed, it takes rights for government purposes. Where the firm paid its own way, it takes only limited rights. Under the Bayh-Dole framework, even inventions made entirely with federal money remain the contractor’s property, with government holding an irrevocable licence. The most powerful defence customer on earth does not take title to its contractors’ inventions, because taking title kills the investment it seeks. Turkiye applied the same logic, and Baykar’s export success followed. The rules now being drafted can adopt this architecture, with clear ownership categories, funding-based licences, and express protection for what a firm builds with its own money.
The second question is dispute resolution. The ordinance provides, in a single sentence, for a tiered mechanism leading to arbitration, with everything else left to be clarified by regulation. This matters more than its brevity suggests. An investor weighing a defence joint venture is weighing what happens when something goes wrong. If the answer is years of litigation, or a mechanism designed and administered by the same authority that is regulator, counterparty and rule-maker at once, the investment does not come. The regulations must deliver a mechanism that is quick, cost-effective and credibly independent.
Thirdly, the licensing regime raises parallel questions. Licensed activity is defined broadly, where anything even remotely concerning defence production becomes regulated. This is married to a severe penalty regime imposing non-bailable offences and imprisonment. Again, there is ample opportunity for the rules to draw these boundaries precisely and win the private sector’s trust. The officials I met appear conscious of this, which is grounds for optimism.
Ultimately, the defence sector is attempting the most consequential institutional opening in its history, and it is doing so publicly, with consultation. What remains is to write rules that give investors what they need most, which is not incentives or exhortations, but certainty.
The writer is a barrister.
Published in Dawn, August 15th, 2026