Ukraine - Country Commercial Guide
Defense Equipment

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2021-09-24


Data in USD thousands









Total Local Production**





Total Exports**





Total Imports





Total Defense Equipment Market





Total Defense Expenditure*





Exchange Rate***: 1 USD

28.3 UAH

28.6 UAH

28.7 UAH

28.9 UAH

(total market size = (total local production + imports) - exports)

Source: State Budget of Ukraine*; Ukrainian State Concern UkrOboronProm annual reports, League of Defense Companies of Ukraine reports**; Ministry of Economy of Ukraine***

Defense spending growth, high demand for defense equipment, and strong local manufacturing capabilities in some segments of the defense industry are boosting Ukraine’s defense sector. Strong demand for defense equipment domestically, improvements in the sector’s structure and procurement processes, as well as growing international defense industry collaboration and trade ties, will benefit Ukrainian defense manufacturers in the longer term.

The Ukrainian government has introduced several initiatives to bolster the strength of the Ukrainian armed forces: Navy Vision 2035 which places emphasis on strengthening maritime security, and Air Force Vision 2035 which places emphasis on modernization of Ukraine’s air force fleet. However, the budget available for new procurement is limited by high expenditures for personnel and operational costs. In 2021, Ministry of Defense (MOD) financing is planned at UAH 118 billion (approx. $4.4 billion). About $842 million goes for the procurement and modernization of weapons and military equipment. In addition, Ministry of Internal Affairs financing will reach $3.6 billion. Overall Ukrainian budget 2020 allocations for defense and security reached 5.9% of projected GDP.

In recent years, given budget constraints, many Ukrainian armed forces acquisitions have been organized through military assistance programs with allies. Within this international military aid, the Ukrainian Army received armoured vehicles and island-class boats. In addition, Ukraine received communications equipment, navigation equipment for vessels, counter-battery radars, cybersecurity technology, night-vision devices, tents, portable lighting systems, personal protective equipment for personnel, mine-clearance equipment, medical equipment, and various replacement parts.

Ukraine is in the process of dismantling the obsolete, Soviet system of state defense acquisition in favor of unified defense acquisition plans. In December 2019, the Ministry of Defense of Ukraine started working with the NATO Support and Procurement Agency (NSPA). In July 2020, the Law “On Defense Procurement” was approved by the Ukrainian Parliament. This law declassifies a significant part of the state defense budget and creates a competitive and transparent environment in the military hardware market. The Ministry of Defense of Ukraine is setting up an independent task force to inspect and approve all acquisitions.

Ukraine is undertaking reform of its defense industry establishing clusters within the state-owned company UkrOboronProm (UOP) and improving UOP’s management efficiency and governance. In January 2019, legislation was approved to grant authority to import and export defense products to enterprises of various forms of ownership. This eliminated a long-standing monopoly of state-owned special exporters within the UOP umbrella and allowed foreign military sales.

The primary suppliers of defense and military equipment to Ukraine’s armed forces are the state-owned company UkrOboronProm (UOP), established in 2010, and a growing number of private enterprises. The share of private companies supplying the national defense sector reached 54 % in 2020.

Because of Ukraine’s acute need to reduce its dependence on Russian defense and military equipment, the GOU seeks to diversify its equipment supplies by purchasing equipment from the U.S. and other Western countries.

The Russian market has historically accounted for a large share of Ukrainian defense component exports, and currently Ukrainian defense companies have worked to strengthen industry cooperation and exports to other countries, with a particular focus on the Middle East and Asia. Ukraine is an attractive partner for countries looking to develop and expand their own defense industries, as Ukrainian defense manufacturers have substantial capabilities in segments such as ground and aerospace and face fewer restrictions on technology transfer than many other players in the international market.

Leading Sub-Sectors

Ukraine’s defense industry most urgent needs include:

Components for radio communications equipment and radio-electronic components;
Engines for military vehicles;


Ukraine recognizes the U.S. as a leader in the worldwide defense industry and international market for military and dual-use equipment. The GOU seeks to cooperate with U.S. companies in a variety of ways including:

  • forming joint U.S.-Ukrainian production enterprises
  • subcontracting with U.S. companies
  • issuing direct work orders to U.S. companies
  • selling equity ownership in select Ukrainian defense companies
  • concession agreements with defense enterprises
  • leasing Ukrainian defense industry enterprise’s workshops and infrastructure for up to 49 years
  • creating U.S.-Ukrainian consortiums among several U.S. and Ukrainian defense industry enterprises

The portfolio of joint projects includes aircraft engines, early warning systems, first-aid and battlefield evacuation vehicles, a NATO-compatible self-propelled 155-mm gun system, as well as steel armor, AFV engines, weapons control systems.

Potential exports and investors should note that Ukraine may access various U.S. and international defense acquisition programs. These include U.S. Foreign Military Financing (FMF), U.S Foreign Military Sales (FMS), U.S. Direct Commercial Sales (DCS), the U.S Congress Ukraine Freedom Support Act of 2014, the European Reassurance Initiative, and NATO Trust Funds.


  • Ukroboronprom State Defense Industry Concern,
  • Ministry of Defense of Ukraine,  
  • National Guards of Ukraine,
  • Ministry of Internal Affairs of Ukraine
  • State Security Service of Ukraine,
  • League of Defense Companies of Ukraine

Trade Events

  • Arms and Security, Kyiv, Ukraine