Chapter 1
Ukraine’s arms industry grew because foreign aid kept arriving late
Ukraine’s arms industry grew because foreign aid kept arriving late. Kyiv built what it could at home, starting with the cheapest weapon that worked. In December 2023 Zelenskyy promised a million drones the following year. By the end of 2024 Ukraine’s industry was described as having about $10 billion a year of capacity, producing more than a million FPV drones, new cruise missiles and its own self-propelled howitzer; in March 2025 it unveiled a Neptune missile with a range of about 1,000 kilometres. Most of the figures for what the industry makes are still the government’s or the makers’ own.
Chapter 2
The money behind it came first from abroad and then from the troops…
The money behind it came first from abroad and then from the troops themselves. In April 2024 Denmark became the first country to pay Ukrainian factories directly to arm Ukraine’s forces, as Kyiv went looking for $10 billion of foreign investment. From August 2025, Brave1 Market let combat units spend points earned in action on equipment of their own choosing; the defence ministry says they ordered about $1 billion in its first year, some 500,000 drones, ground robots and electronic-warfare systems. The commander of Ukraine’s drone forces said in August 2026 that the limit is not capacity but money arriving late — a claim that holds on the timing, which independent trackers document, and cannot be tested on his capacity figures. By industry estimates the sector’s top segments doubled to $6.8 billion in 2025 and employ about 300,000 people.
Chapter 3
In 2026 the direction of supply began to reverse
In 2026 the direction of supply began to reverse. Allies still hand Ukraine designs to build: Britain announced in July it would hand over the rights to the Stone Cloak drone jammer, and in August the designs of the Storm Shadow missile, though neither came with a production timeline and the missile could take months or years to build. But Ukrainian products have started to flow the other way. In August F-Drones delivered 2,000 strike drones to the US military, the first Ukrainian drone cleared for export there, as the Pentagon tested six Ukrainian makers with a view to production in the United States. Ukrainian firms are also putting capacity on allied soil: the ammunition maker DEMZ signed a contract in August to build NATO-standard shells in Lithuania, with output planned for the end of 2027; General Cherry says it is already building drones in Finland, mostly for European customers; and in October a Ukrainian ground robot was promised a production line in Canada.
Chapter 4
The constraint now is the state as much as the market
The constraint now is the state as much as the market. Kyiv reopened controlled arms exports in 2025, but a year later the industry council counted no more than ten small private contracts and no permits issued under a simpler wartime procedure introduced in July 2026, blaming large up-front fees, a high minimum contract size and the state’s right to claim output first. In September more than 400 companies asked the government for a single body with real authority over the industry, saying its functions are split across six institutions with nobody accountable for growth or exports. What remains open is whether the licences turn into production lines, whether the plants abroad produce on schedule, and whether exports grow beyond a handful of contracts — and, beneath all of it, whether anyone outside the government can confirm how much Ukraine actually makes.
And now
Germany is preparing to buy Ukrainian-designed Bars jet-powered missiles for its own army. If signed, it would be the first Ukrainian strike weapon fielded by the Bundeswehr. The FT reported on October 26 that a test-batch deal is expected within weeks, for trials in early 2027, and a German official confirmed talks to the Kyiv Independent. The same reports say a German–Ukrainian venture in Germany has delivered its first German-funded batch of Bars to Ukraine, three months after the July co-production deal. Germany has put a Flamingo purchase on hold.
The routes out are opening faster than the trade. Ukrainian makers may now bid for tenders run by NATO’s procurement agency, NSPA; none has yet won one. The Pentagon delayed its bomber-drone contest, in which about half the entrants are Ukrainian; the firms blame Ukrainian export approvals and US visa waits. At home, parliament voted in first reading to pay the 20–30% arms-export fee into a fund for weapons and soldiers’ pay. The industry council says exports have effectively not started and no official total has been published.
Where it stands today →