97% of private defense producers expect arms export opening – TSU survey
Drone Industry
97% of private arms and military equipment producers are waiting for export restrictions to be lifted so they can begin supplying partner countries, launch joint production, and scale up B2B and B2G partnerships.
These are the findings of an analytical report by Ukraine’s Tech Forces (TSU) and the Better Regulation Delivery Office (BRDO), "War as a Driver: How Ukrainian Defense Technologies and the Private Industry Are Growing," presented on August 28.
The report outlines trends, needs, and expectations of Ukrainian defense technology producers in cooperation with international partners. The conclusions are based on a survey and in-depth interviews with member companies of Ukraine’s Tech Forces.
Key findings of the report:
- 97% of private defense producers expect the opening of arms exports. Most companies see NATO member states as priority export markets, while also identifying the Middle East and North Africa as potential destinations;
- Median capacity utilization stands at 55%.;
- 79% of surveyed producers cited short-term state contracts as a key obstacle to growth. Limited state procurement volumes also hinder sector development;
- growing demand from military units, volunteers and local authorities has become a growth driver, making the market more competitive, improving quality, accelerating innovation, and lowering prices;
- diversification of buyers is another growth factor. Today, 88% of surveyed companies supply directly to military units, compared to 64% that participate in state procurement;
- Kyiv and western Ukraine have become the main production hubs. Most producers operate multiple facilities, and the median time to launch a new production site is three months. Commercially available Chinese components are gradually being replaced with higher-quality European, U.S., and Ukrainian ones. Over 28% of respondents now use at least half domestically produced components;
- the greatest need for arms producers is investment for R&D, scaling, entering new markets, and launching new products.
"This is the first document to highlight the main drivers for the development of asymmetric weapons producers. The report contains policy recommendations for EU institutions, governments of EU member states, representatives of European defense industries, and the Ukrainian government. Its goal is to advocate to European partners the importance of investing in Ukrainian defense technologies, opening access to programs and financial instruments, and launching joint production and technology exchanges to jointly strengthen Europe’s defense capability," said Kateryna Mykhalko, Executive Director of Ukraine’s Tech Forces.
"Producers of asymmetric weapons today demonstrate what the traditional defense industry often cannot: the ability to rapidly devise solutions and move them into serial production. If these technologies become part of the European defense ecosystem, we will achieve a common security shield for Ukraine and EU allies," emphasized Oleksii Dorohan, Executive Director of BRDO.
As is known, arms exports are not legally banned in Ukraine, and a special procedure exists. A company must apply to the State Service for Export Control (SSEC), which coordinates the request with security agencies and the Defense Ministry. In practice, however, such applications are not approved under various pretexts, despite the state’s shortage of funds for defense procurement. Thus, the export ban is de facto informal.
