Ukrainian defence industry. Photo: foreignukraines.
Ukraine’s defence industry continues to show impressive growth. Along with state-owned enterprises, the private sector is actively involved in arms production, which contributes to the development of the industry. However, for further effective progress, Ukrainian producers face the problem of securing sales of their products and need deregulation, TimeUkraineIsrael reports, according to Liga.net.
According to Herman Smetanin, Minister of Strategic Industries of Ukraine, the defence industry, including Defence Tech, has seen significant development this year. While state-owned enterprises were the leaders of the domestic industry before the outbreak of full-scale war, numerous private companies entered the arena during the war. Currently, there are over 800 registered arms and equipment manufacturers in Ukraine, and only 12% of them are state-owned enterprises. In particular, the state-owned concern Ukroboronprom has significantly increased its production over the past year, allowing it to enter the top 50 largest arms manufacturers in the world.
Defence technology sector: rapid growth and new prospects
One of the main areas of development of the Ukrainian defence industry is the production of unmanned aerial vehicles (UAVs), robotic ground systems and electronic warfare (EW) equipment. According to forecasts, by 2025, production in Ukraine will reach more than 4.5 million UAVs, more than 20,000 robotic systems and 200,000 electronic warfare systems. However, despite these ambitious figures, the Ukrainian state budget is unable to cover all the costs of developing and maintaining the defence industry, which leaves some opportunities untapped.
Growth challenges: private business needs new conditions
The situation is complicated by the fact that private companies that successfully fulfil government contracts face the problem of scaling up and entering mass production. According to Kateryna Mykhalko, executive director of the Technological Forces of Ukraine association, these companies need not only internal development but also international partnerships. Private producers are actively calling on the government to create more predictable business conditions, such as long-term contracts, financing for expensive developments, and the possibility of exporting products to foreign markets that are not purchased by the Ukrainian Armed Forces.
The private sector proposes to open controlled exports of products that the state cannot buy or that the army does not need. Such exports could be directed only to countries with which Ukraine has security treaties or which are members of the Ramstein coalition.
State support: new initiatives and opportunities
Recently, the Cabinet of Ministers of Ukraine adopted a resolution on financial support for defence companies. The concessional lending programme provides an interest rate of 5% for manufacturers working in the defence technology sector. Concessional loans can be used for the development, production and modernisation of military equipment and weapons. However, banks providing these loans must have top secret status, and currently only state-owned institutions such as Oschadbank and Ukreximbank are eligible.
External market and international financing
At the same time, Ukraine continues to develop cooperation with international partners. According to Brave1 CEO Natalia Kushnerska, the company’s portfolio now includes more than 130 investors from more than 30 countries. Last year alone, the Ukrainian defence industry attracted about $10 million in investments, and this year it is expected to attract up to $50 million.
Investors are particularly interested in the defence technology sector, which is currently growing faster than any other industry in Ukraine. At the same time, despite the increase in investment, Ukrainian producers cannot rely solely on the domestic market and need additional opportunities to expand their presence in foreign markets.
Photo: Interfax.
Given the rapid growth of Ukraine’s defence industry, it remains important to ensure stable sales of products and create conditions for private business development. Opening up new opportunities for international cooperation, deregulation and investment will help strengthen Ukraine’s defence capabilities and ensure its long-term security.
