Strategic Priorities for Ukraine’s Defence Industry: A Roadmap for Transformation
- office65275
- Mar 17
- 3 min read
Nearly three years into Russia's full-scale invasion of Ukraine, it has become clear that Ukraine’s Defence Industrial (DI) sector possesses significant potential to support not only national security but also to serve as a substantial driver of economic resilience, particularly during the post-war recovery phase. Moreover, Ukraine's aspirations for European and Euro-Atlantic integration necessitate that its DI sector undergo substantial reform to align with Western market models and standards.
To achieve these goals Ukraine must pursue a targeted reform agenda in the DI sector. In close collaboration with government representatives, volunteer communities, businesses, and the private sector, We Build Ukraine has identified key priorities to guide the development of this sector. These priorities aim to enhance resilience, foster innovation, and position Ukraine as a reliable and competitive player in the global defence landscape.
By learning from successful international models, Ukraine’s own experience and addressing the challenges revealed through ongoing defence efforts, the following foundational steps are needed to be addressed for modernization and sustainable growth in Ukraine’s DI sector:
1. Planning, Predictability and Strategic Partnership
The absence of clear, early-stage planning undermines the industry's ability to meet national defence needs effectively. Manufacturers must no longer face the uncertainty of starting each fiscal year without clarity on production requirements. Strategic, forward-looking defence planning tied to robust budget allocation is essential. To avoid mid-year contract delays, Ukraine must institutionalize mechanisms that ensure synchronized decision-making, clear communication of defence needs with manufacturers and predictable funding cycles. In addition to that, cooperation with Ukraine has become one of the key priorities in the EU newly adopted DI-related strategic documents. To synchronize our joint efforts in mutual DI sectors’ developments there should be clearly defined mechanisms to maintain strategic dialogue and engagements involving both government and private sector representatives to assure multiangular cooperation and maturing.
2. Long-term contacting
Current procurement practices in Ukraine lack stability and flexibility and require a modern defence ecosystem with a transparent competitive market environment. Expanding practices of using long-term contracts with guaranteed budgeting will offer both stability and room for innovation of the sector. Such an approach will incentivize private-sector engagement, enhance adaptive responses to emerging battlefield realities and facilitate more robust investments into manufacturers’ R&D, innovation, production scaling and protection of foreign investments. Reinforcing procurement standards with funded long-term contracting practices will accelerate Ukraine’s DI sector adaptation to NATO and EU frameworks and further strengthen Ukraine's integration into international defence markets.
3. Modernizing Pricing Systems
Outdated pricing mechanisms inherited from the Soviet era humper innovation and competitiveness. The government’s excessive control over component costs and profit margins discourages efficiency and creativity in the DI area. A market-driven pricing framework that stimulates the sector's efficiency, sustainability, and adaptability is mandatory. Reforming this system will empower manufacturers to invest in new technologies and scale production to meet both domestic and international demands.
4. Reforming Intellectual Property and Technology Transfer Policies
Innovations prosper on well-defined and regulated intellectual property (IP) rights and seamless technology transfer mechanisms. Modernizing Ukraine’s IP framework will encourage collaboration with global defence leaders, ensuring fair commercialization and scalability of manufacturing capabilities. Establishing partnerships with EU and NATO allies to exchange R&D initiatives and lessons learned experience will enable Ukraine to adopt battlefield-tested technologies and position itself as a reliable partner in defence innovation.
5. Lifting Wartime Export Restrictions and Expanding Global Engagement
Currently, the exposed wartime export ban of internally produced military goods limits Ukraine’s defence industry from unleashing its full potential. Removing these restrictions will open opportunities to invest in Ukrainian product scalability and innovation as well as attract foreign investments. Export liberalization must be paired with robust regulatory compliance, aligning with international standards to build trust and foster long-term partnerships. Ukraine’s integration into global supply chains will strengthen its role as a devoted associate in the international defence ecosystem.
Conclusion
Addressing these priorities can be a good starting point in bringing Ukraine’s DI sector towards a resilient, innovative, and globally competitive pillar for the country's economic recovery and European security architecture strengthening. Learning from the EU and NATO best practices, aligning DI's operation mechanisms along with international standards, and leveraging battlefield-tested expertise will not only reinvigorate the DI’s reform and enhance national security but also promote Ukraine as a key contributor to global defence advancements.