The Hungarian Government has agreed to form a joint venture (JV) with German defence company Rheinmetall to manufacture the latest generation Lynx infantry fighting vehicles in the country.

The deal, reportedly valued at more than €2bn, is part of the government’s defence modernisation programme to fulfil its Nato obligations.

As agreed, a new production facility will be developed in Hungary to manufacture the infantry fighting vehicles (IFV).

The induction of such armoured vehicles is expected to help the Hungarian armed forces to address security challenges in the Euro-Atlantic region.

In a joint statement, Hungarian Minister of Innovation and Technology László Palkovics and Defence Development Commissioner Gáspár Maróth said: “As part of its commitment to Nato, Hungary is replacing its heavy ground forces equipment. Following the tanks and artillery, it is now the turn of the infantry combat vehicles, which form the backbone of the capabilities set.

“As the most advanced system of its kind, the Lynx has demonstrated its suitability for a central role in the army’s capabilities spectrum for decades to come. In keeping with earlier promises by the Hungarian Government to enhance the nation’s armed forces, this cooperative endeavour extends far beyond the modernisation of military technology.”

Rheinmetall executive board chairman Armin Papperger said: “We’re very proud to be able to make an important contribution to the sustained expansion of Hungary’s defence technology capabilities in cooperation with local industry.

“We look forward to working together with our Hungarian friends and partners, and will do everything in our power to assure the long-term success of this venture.”

The deal comes a week after Hungary signed a declaration of intent to purchase air defence missiles from Raytheon Technologies. The deal was valued at nearly $1bn, reported Reuters.

Last year, Rheinmetall secured a €300m contract to deliver main armament and hulls for the Hungarian Army’s PzH 2000 self-propelled howitzer and Leopard 2 main battle tank.