Over four years of full-scale war, Ukraine has built one of Europe’s most dynamic defence ecosystems: around 1,100 private companies, more than 2,300 start-ups and research teams, and over 400,000 employees. In 2025, the state purchased almost UAH 430 billion worth of products from Ukrainian manufacturers, whose share of lethal defence procurement rose to 82%.
The private sector has driven the main technological breakthroughs, particularly in drones, electronic warfare, communications, robotic and counter-drone systems. Ukraine produced 4.5 million drones in 2025, while the FPV segment’s annual capacity is expected to exceed eight million units in 2026. Overall defence production capacity has expanded from $1 billion in 2022 to $50–55 billion, but some production lines remain idle because of insufficient orders.
The main barriers are slow procurement, weak planning, the absence of unified standards and testing procedures, shortages of funding and skilled workers, dependence on imported components, and market fragmentation. Brave1 Market, DOT-Chain Defence and the eBaly system are already accelerating deliveries to the front: some supplies now reach units within about ten days, while equipment worth approximately UAH 14 billion has been ordered through eBaly. However, digitalisation alone cannot replace a coherent industrial policy.
Exports are another major challenge. Despite at least 40% of capacity remaining unused, manufacturers face an opaque approval process that can take six months. Of more than 200 applications reviewed, approvals were largely limited to the temporary export of products for exhibitions or demonstrations.
The report recommends creating a single pathway from development to mass-production contracts, introducing long-term planning and unified standards, expanding joint production, and establishing a one-stop digital portal for companies. Exports should cover only surplus production, must not undermine supplies to Ukraine’s Defence Forces, and should operate through clear deadlines, electronic procedures and end-use controls.
The optimal model is mixed: the state should oversee strategy, security and major industrial capabilities, while the private sector provides speed, competition and innovation. The next task is to transform Ukraine’s wartime technological breakthrough into a sustainable industry that strengthens both national defence and the economy.
This analytical report was prepared by the Center for Social and Economic Research (CASE Ukraine) with support from the Askold and Dir Foundation, administered by ISAR Ednannia, as part of the project “A Strong Civil Society in Ukraine: A Driver of Reform and Democracy,” funded by Norway and Sweden. The content of the report is the sole responsibility of CASE Ukraine and does not reflect the views of the governments of Norway, Sweden, or ISAR Ednannia.