Ukraine’s defense industry is experiencing a transformation that few could have predicted just a few years ago. Once heavily reliant on Soviet-era stockpiles and foreign imports, the country now finds itself at the center of a sweeping effort to build a homegrown arsenal—one that not only meets its own urgent needs but may soon supply cutting-edge military technology to Western allies. This remarkable turnaround comes as Ukraine’s bid for NATO membership remains stalled, prompting its partners in Europe and the United States to invest billions in Ukrainian weapons manufacturing as a bulwark against further Russian aggression.
According to the Associated Press, Western governments are increasingly viewing Ukraine’s burgeoning defense sector as a crucial component in deterring Moscow—both now and in the future. The strategy is two-pronged: help Ukraine defend itself today and, over time, create a European defense powerhouse that can export advanced drones, missiles, and other military hardware to NATO members and beyond.
The numbers tell a compelling story. As reported by Defense One, Ukraine’s weapons industry now supplies nearly 60% of its army’s needs, a staggering increase from just 10% when Russia launched its full-scale invasion three and a half years ago. But this rapid progress comes with a caveat: Ukraine’s 2024 military budget stands at $64 billion, less than half the size of Russia’s. That disparity makes continued Western financial and technological support not just helpful, but essential.
European governments, recognizing the stakes, are pouring funds into Ukraine’s arms industry. The goal isn’t just to help Kyiv repel Russian forces, but to eventually purchase Ukrainian-made weapons for their own militaries. As AP noted, “Ukraine’s weapons industry is seen as a critical factor for deterring Russia now and in the future.” The country’s defense minister has been explicit about this new direction, emphasizing that the expansion of domestic production is designed to serve both Ukraine’s immediate needs and those of its allies.
September 19, 2025, marked a significant milestone: Ukraine received its first arms shipments through a new NATO aid pool known as the Prioritized Ukraine Requirements List (PURL). According to the National Public Broadcasting Company of Ukraine, these initial deliveries included interceptors for Patriot air defense systems and HIMARS munitions. President Volodymyr Zelenskyy announced that the PURL pool currently holds about $2 billion, with another $1.5 billion expected by October. This mechanism is designed to streamline and prioritize the flow of critical weaponry to Ukraine, ensuring that its armed forces are equipped to withstand ongoing Russian assaults.
The transformation of Ukraine’s defense sector isn’t just about numbers or budgets—it’s about forging new partnerships and embracing innovation. Defense Minister Denys Shmyhal revealed that 25 foreign arms manufacturers have already established production facilities within Ukraine. In a recent update shared on Telegram and recounted by Politico, Shmyhal highlighted the diversity of these collaborations, including the so-called “Danish model,” where Kyiv’s allies fund the production of weapons tailored to Ukraine’s specific military requirements. “Each manufacturer works in close dialogue with the Ukrainian government. We offer partners various models of cooperation, including the ‘Danish model,’ Build with Ukraine / Build in Ukraine,” Shmyhal wrote. “The priority is for the main part of the company’s products to meet the needs of the Ukrainian army.”
To further entice foreign investment, Ukraine is preparing to launch an ambitious initiative called “Defence City.” This special economic regime will offer tax breaks, simplified customs procedures, mechanisms for relocating production to safer regions, expanded state financial support, and new opportunities for export and integration into global supply chains. As Shmyhal explained, “This is a special regime for the development of Ukraine’s defense industry. It provides for tax breaks, simplification of customs procedures, a mechanism for relocating production to safer regions, expansion of state financial support and opportunities for export and integration into global chains.”
Some major international players have already signed on. Earlier this month, French arms giant Thales registered a joint venture with Ukraine’s state-owned UkrOboronProm to work on air defense, radar systems, electronic warfare, and tactical communications, Reuters reported. German manufacturer Rheinmetall began producing its Lynx infantry fighting vehicle in Ukraine at the end of 2024 and recently announced plans to build an ammunition plant inside the country. Turkish drone maker Baykar, meanwhile, has been laying the groundwork for a production facility in Kyiv since 2022, with a license to produce its drones granted in June 2023.
Ukraine’s government isn’t just inviting manufacturers to build weapons—it’s also opening its doors to innovation and testing. In July 2025, the Ministry of Digital Transformation launched a new initiative to attract foreign weapons and technology by offering Ukraine’s battle-tested proving grounds for arms trials. While the emphasis is on testing, the broader aim is clear: to entice foreign firms to bring capital, expertise, and ultimately full-scale production to Ukraine. By connecting international manufacturers with local companies, Ukraine hopes to integrate itself into global defense supply chains and cement its place as a hub for military technology.
This approach is already bearing fruit. For example, a Ukrainian drone maker recently launched a servicing hub for foreign drones, supported by the government’s Brave1 networking initiative. These efforts are designed not just to bolster Ukraine’s own capabilities, but to create a defense ecosystem that can serve partners around the world.
Despite these advances, the challenges remain daunting. Ukraine’s military budget, while substantial by historical standards, is dwarfed by Russia’s. That’s why the country continues to rely on Western allies for both direct weapons deliveries and financial support. As highlighted by the Associated Press, “its military budget—$64 billion in 2024—is less than half the size of Russia’s, which is why it turns to Western allies for weapons and, increasingly, money.”
Yet, the sense of momentum is undeniable. European governments are not only funding Ukraine’s arms industry expansion but are also signaling their intention to buy Ukrainian-made weapons for their own defense needs. This marks a significant shift in Europe’s security landscape, with Ukraine positioned as both a frontline state and a future arsenal for the continent.
As the war grinds on, Ukraine’s defense industry stands as a testament to resilience and adaptation. With Western investment, innovative partnerships, and a clear focus on both immediate and long-term goals, Ukraine is rewriting the rules of its own survival—and perhaps, in time, the security of Europe itself.