Taking the CQ as a starting point, Iranian engineers developed an offshoot known as the DIO "S-5.56" ("DIO" = "Defense Industries Organization") which retained the same caliber and action - essentially a copy of the Chinese product - though incorporating more local know-how and manufacturing capabilities to promote a self-sustained Iranian defense complex. The DIO S-5.56 began marketing in 2003. From this, a more radical assault weapon design began to take shape and proved more Iranian in origin. Design work on the type began in 2001 and testing ensued before the rifle was adopted in 2003 and entered serial production during 2004 as the "KH2002".
Interestingly, the Iranians opted to go the "bullpup" route for the new weapon incorporated the magazine feed, firing action and bulk of the system into the stock, freeing the frontal section to showcase a short forend while retaining use of a full-length rifled barrel. The receiver was formed with clean lines throughout as well as sections of side-mounted rails for various accessories. Over the receiver lay a long carrying handle which enveloped the ambidextrous charging handle and housed the rear iron sight assembly. The gas system was mounted over the barrel and a short section of barrel protruded from the forend, capped by a slotted flash suppressor at the muzzle and a tall forward iron sight along its midway point. The trigger unit and angled pistol grip were underslung in the usual way though a hand guard was integral and contained the forward hand grip with its ergonomic finger grooves for a firm hold. The aft-end of the weapon was large to house the bulk of the internal working components including the bottom-mounted feed and side-mounted ejection port. The butt-end of the stock was padded for some comfort as the weapon would be pressed up against the shoulder when fired. Overall, the KH2002 presented a most modern design and a testament to the evolution of Iranian weapons design capability.
The KH2002 retained the 5.56x45mm NATO chambering and gas operation with rotating bolt system. The feed utilized STANAG-type magazines of 20- or 30-round counts. 20-round versions were straight detachable boxes with 30-round forms of the standard M16-style curved design. Rate-of-fire was listed at 800 to 850 rounds per minute with a muzzle velocity reaching 900 meters per second. A fire selector allowed for semi- and full-automatic fire modes as well as a three-round burst facility. Effective engagement ranges equaled 450 meters and overall weight presented a 3.7 kilogram product with a running length of 780mm. A folding bipod was made optional for the sustained fire role and optics - equally optional, could be fitted over the receiver. The bolt mechanism also maintained the ability to be flipped to allow for left-handed firing - making the KH2002 a truly ambidextrous product comparable to modern European designs such as the British L85 and Austrian Steyr AUG.
The KH2002 is currently in frontline service with Iranian Armed Forces and is also recognized under the name of "Khaybar". From the base assault rifle system, the line has since spawned a shortened-barrel assault carbine form and a dedicated Designated Marksman / Sharpshooter form with specialized optics and longer barrel.
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