Estonia Country Commercial Guide
Learn about the market conditions, opportunities, regulations, and business conditions in estonia, prepared by at U.S. Embassies worldwide by Commerce Department, State Department and other U.S. agencies’ professionals
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Estonia Aerospace and Defense
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Overview

By 2026, Estonia’s defense spending is expected to exceed 5% of GDP, underscoring a long-term commitment and creating a stable, high-demand environment for both public and private investment in defense capabilities. The country is also well positioned to drive dual-use innovation and technological leadership, leveraging its strong engineering tradition and advanced digital infrastructure. Unlike many peers in the region, Estonia’s defense industry is largely privately owned, with the state playing a supportive role through funding, regulation, and procurement rather than direct ownership.

Cybersecurity and cyber defense are a core part of Estonia’s industry. Built on the country’s strong digital expertise and the NATO-accredited Cooperative Cyber Defense Centre of Excellence in Tallinn, local companies deliver training, cyber ranges, secure communications, and network protection. This software-driven sector is highly exportable and serves both civilian and military needs against modern hybrid threats.

The weapons, ammunition and explosives subsector has historically been a gap for Estonia, but recent policy and investment have pushed it into a growth phase. New infrastructure and legal frameworks are being developed for industry to produce explosives and ammunition components domestically in order to reduce dependence on imports and to respond to heightened regional demand. At the same time, Estonia continues to procure specialized munitions from overseas while building out local production where economic and strategic sense allows.

Aerospace in the narrow sense—manned aircraft and major airframe production—plays only a small role in Estonia, but the country contributes to aerospace through UAV development, avionics and sensor payloads, and through emerging activities in small satellites and dual-use space technologies. 

Defense IT, AI, and simulation form a growing subsector in Estonia. Companies build command-and-control software, simulation tools, and autonomous systems that support drones and robotic vehicles. These solutions are exportable and link closely with Estonia’s strengths in cyber and electronics, creating advanced integrated technologies rather than just hardware.

The NATO DIANA Regional Hub in Tallinn is part of NATO’s Defence Innovation Accelerator for the North Atlantic, which supports startups developing dual-use technologies with both civilian and defense applications. Operated by Tehnopol Startup Incubator together with Tartu Science Park, the hub runs six-month accelerator programs offering funding, mentoring, and access to testing facilities across Estonia and other NATO countries. Startups can receive initial grants of €100,000, with top performers eligible for an additional €300,000. The center plays a key role in connecting Estonia’s innovation ecosystem to NATO’s broader defense and security networks while helping young companies bring advanced technologies to market.

Leading Sub-Sectors

Unmanned systems (both ground and aerial) Cybersecurity/cyber defense

Opportunities

Invest in Estonia/defense sector

Resources

Estonian Defense Industry Association
Estonian Centre for Defense Investment
Defense Industry Funding

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