By Viktor Koziuk and Ilona Sologoub
If necessity is the mother of innovation, Ukraine’s military technology industry, particularly drone production, is Exhibit A. When Russia first attacked Ukraine in 2014, drones were used mostly for reconnaissance. Ukrainian firms developed many models, but production was limited and mainly geared to the civilian sector. Today, Ukrainian drones are central to the country’s ability to hold off a much larger aggressor, and Ukraine’s development and procurement processes may hold lessons for Nato’s leaders as they discuss rearmament at their Ankara summit this week.
The rapid development of Ukraine’s defence industries since Russia’s full-scale attack in 2022 was an adaptation to chronic shortages of munitions and other matériel. In 2022, Ukraine produced barely a thousand drones (volunteers imported about 9,000); by 2024, output had skyrocketed to 1.7–2.2 million. Another three million were produced in 2025, and seven million are planned for this year. There are now over 500 domestic drone producers. Some can produce roughly 1.5 million drones per year, and three are among the top 100 producers in the world.
The supply of drones to the army and the training of drone operators initially depended entirely on volunteers, such as Victory Drones. Even now, volunteers play a major role in providing drones and other supplies to the armed forces. For example, the Come Back Alive foundation plans to procure 16,500 long-range drones this year, worth $34 million.
The industry is highly decentralised and extremely heterogenous. Some producers are huge. The long-range Liutyi strike drone was developed by Antonov, the company that produced the world’s largest aircraft. Other producers assemble drones in kitchens and garages from components purchased on AliExpress and use 3D printers to make spare parts. Soldiers often update or repair drones themselves.
The products range from small reconnaissance devices and first-person-view (FPV) drones carrying the equivalent of a hand grenade, to large machines that can deliver several hundred kilogrammes of cargo to the frontlines or “sanction” Russian oil infrastructure, logistics, and military assets. Ukrainian firms also produce drone detectors, electronic warfare systems, and other anti-drone devices—from simple net throwers to automated systems that can locate and intercept enemy drones with little or no human intervention.
The spectrum of products meets diverse needs, from patrolling the kill zone at the frontline—currently about 50 km wide—to destroying Russian supply lines (100–300 km from the frontline) to hitting production facilities more than 1,000 km inside Russian territory. Production of middle-range strike drones, interceptor drones, and land drones increased significantly in 2025 (during the first six months of 2026, Ukraine’s army implemented over 50,000 logistic and evacuation missions with land drones).
The industry is highly dynamic: constant communication between producers and army units means that prototypes are tested and deployed in a few months or even weeks. Although Russia often reverse-engineers Ukrainian technologies and starts producing drones at scale, Ukrainian military leaders claim to have 50 per cent more FPV drones than the Russians.
That is no accident. Although the industry’s initial growth spurt was truly grass-roots, government policies have since provided significant support. In 2023, the government created the Brave1 cluster, which unites producers, researchers, military personnel, and investors in order to streamline the production and delivery of equipment needed at the frontlines. The government provides seed grants to innovative projects, helps Ukrainian producers to register their innovations, and connects them with users of their products. Producers can also report bureaucratic obstacles.
In June 2025, the government launched the DOT-Chain procurement platform. Army brigades can place orders for munitions there, and the State Logistics Operator (DOT, which runs military procurement) can fill the orders. The platform includes a reward programme: the more enemy targets a brigade destroys, the more additional drones it can receive from the government. As of February 2026, DOT-Chain offered some 470 products from 135 producers, including drones and electronic warfare systems.
A few months later, the government launched a special tax regime for defence producers called Defence City, offering tax breaks, support for relocation or protection of premises if needed, and a simplified export procedure. By June 2026, 31 companies with total revenue of about $2 billion had registered.
Restarting weapons exports, a step announced early this year, could also help Ukraine’s military technology industry. Exports effectively stopped in February 2022, but in 2024 weapons producers started lobbying for reopening. With the government unable to procure everything producers can manufacture, exports would provide additional revenues to scale up production to meet Army demands.
Returning to the international market would also allow joint ventures with European producers to be established in Ukraine. To leverage Western capital and access to safe production, Ukrainian firms already have joint ventures with enterprises in Germany, Canada, the UK, and elsewhere. Localising such ventures would keep human capital and technology at home.
This is especially important given the domestic industry’s shortage of qualified personnel, particularly engineers. And localisation is needed to address another major problem facing drone producers: reliance on imported components, which are sourced mostly from China. According to research by the Lviv-based IRON defence technology cluster, localisation stands at 85 per cent for frames and structural components, 14 per cent for cameras, and 12 per cent for engines. Some producers within the Brave1 cluster have started manufacturing cameras to replace Chinese products, while other firms produce drone-borne munitions.
The bigger problem is that drones are not a panacea. While a special army branch, Unmanned Systems Forces, has destroyed Russian assets worth $40 billion since it was established about a year ago, drones cannot replace personnel and do not make “traditional” weapons obsolete.
But even if drones are not a magic bullet, they have transformed geopolitics. When Russia uses drones to test the defences of Poland or Romania, or fly over critical German infrastructure, neither Nato nor individual countries respond for fear of escalation. Similarly, Iran has demonstrated how low-cost drone-based warfare can upend conventional tactics.
Ukraine’s rapid emergence as a leader in drone technologies can help Nato and Gulf countries defend themselves against Russia and Iran. But Ukraine urgently needs help, too. Drones are no substitute for the air-defence systems, long-range missiles, and other conventional weapons Ukraine needs to end the war.
Project Syndicate 1995–2026
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