A KF-21 fighter prototype conducts a test flight, Jan. 17, 2023. Courtesy of Defense Acquisition Program Administration

Korea Aerospace Industries (KAI) said Tuesday it has signed a 1.96 trillion-won ($1.41 billion) deal with the Defense Acquisition Program Administration (DAPA), to commence production of the next-generation KF-21 fighter jet.

Under the deal, KAI will produce 20 units of the KF-21 and provide follow-up logistics support, technical manuals and training. The fighter jets will be in service for the Korean Air Force by the end of 2026.

Korea started a project called the KF-X in the early 2000s in order to develop its own fighter jet more advanced than the KF-16, and have the multirole fighter plane replace the country's aging fleet of F-4s and F-5s.

Korea and Indonesia signed a deal in 2010 to cooperate on the project, under which Jakarta would fund 20 percent of the total development cost of 8.8 trillion won, in exchange for a number of planes that would be manufactured there for the Indonesian Air Force.

The development of the KF-21 started in 2015 and is slated for completion in 2026. KAI said the development of the KF-21 is 80 percent complete, and the aircraft has already demonstrated its performance and stability through initial test evaluations.

The KF-21 finished its first test flight in July 2022 and also succeeded in an air-to-air refueling test, which proves the jet's long-range operational capabilities.

The development of the KF-21 involves over 600 domestic partner companies, with a target localization rate of 65 percent.

KAI, based in Sacheon, South Gyeongsang Province, seeks to have the KF-21 as the next lead-off in Korea's defense exports, following the FA-50 light fighter jets, which are enjoying increasing global demand particularly in Europe.

KAI also said Tuesday it has signed an agreement to team up with Wojskowe Zakłady Lotnicze-2, a maintenance, repair and overhaul subsidiary of Poland's state-owned defense group PGZ, for the establishment of the support system for FA-50s.

In July 2022, KAI signed a $3 billion deal with Poland to export 48 FA-50s to the European country and delivered 12 units last year.

"Despite many challenges and difficulties, the KF-21 project reached its current status due to the strong cooperation of the government, the Air Force, DAPA and (participating firms)," KAI CEO Kang Goo-young said. "KF-21 represents a historic achievement in the aerospace industry for Korea and will stand as a symbol of true self-reliance in national defense."