Study: Ukraine’s defence industry can produce $40B worth of goods annually, while the state is ready to spend no more than $6B

The Ukrainian Institute for the Future and the Ukrainian Council of Defence Industry have presented the findings of a study on the international arms market and the export potential of Ukraine’s defence industry. The main conclusion is that further blocking of Ukrainian arms exports poses critical threats to the sector.

The authors of the study surveyed Ukrainian arms and military equipment manufacturers. Eighty-five percent of private companies said they either plan to relocate abroad or have already done so. “The state is unable to fully finance the sector, and private manufacturers are losing the motivation to stay in Ukraine,” the study notes.

According to the analysts’ conclusions, continuing to block exports carries critical risks of losing specialists, factories, and technologies, as well as creating shortages of arms and military equipment for the Armed Forces of Ukraine due to halted production.

At the same time, uncontrolled opening of exports also carries serious risks — in particular, reputational damage from exporting during wartime and the threat of technology leaks that could fall into enemy hands. According to the CEO of the Ukrainian Council of Defence Industry, Ihor Fedirko, the association is developing its own concept for opening exports that will take all these risks into account.

Analysts estimate that there are currently over 800 defence companies in Ukraine, the vast majority of them private. The production capacity of these companies is $40 billion per year, while actual domestic demand is several times smaller. The country’s current real export capacity is assessed at $1–2 billion per year, with potential for further growth. “Under a positive scenario, Ukrainian arms and military equipment exports could grow to $8 billion within three years,” Fedirko said.

Defender Media will publish a detailed feature on the study in the coming days. In June, Ukraine took its first step towards unblocking exports by allowing the export of domestic technologies for joint weapons production in allied countries.