This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 8/6/2019


            Data in USD thousands






Total Local Production**





Total Exports**





Total Imports





Total Market Size*





Exchange Rate: 1 USD

27.2 UAH

29.5 UAH


30.8 UAH

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

Source: BMI/US Dept. Of State WMEAT*; Ukrainian State Concern UkrOboronProm annual reports**

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.  However, factors such as corruption, limited investment openness, and non-transparent governance in the defense sector weigh on the sector's overall performance.  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.

In 2019 Ministry of Defense (MOD) financing is planned at UAH 102.5 billion (approx. $ 3.42 billion).  About $ 566 million goes for procurement and modernization of weapons and military equipment.  Ministry of Internal Affairs financing will reach $ 2.7 billion.  Overall Ukrainian budget 2019 allocations for defense and security reached 5.38% of GDP.
In recent years, given budget constraints, many Ukrainian armed forces acquisitions have been organized through military assistance programs with allies.  Key suppliers of defense equipment to Ukraine have been the US and the UK.

Ukraine is undertaking a reform of the defense industry establishing clusters within the state-owned company UkrOboronProm (UOP) and improving UOP’s management efficiency and governance.  In January 2019, legislation has been approved to grant the authority to import and export defense products to enterprises of various forms of ownership.  This will eliminate a long-standing monopoly of state-owned special exporters within the UOP umbrella and allow 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 will reach 60 percent in 2019.

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 on the international market. Facilitating this process, in July 2016, the Ukrainian parliament passed regulation enabling Ukrainian aircraft manufacturers to enter international joint ventures (JVs) and produce equipment overseas. Leading Sub-Sectors

Leading Sub-Sectors

Ukraine’s defense industry most urgent needs include:
  • Components for radio communication equipment and radio-electronic components
  • Engines for military vehicles
  • Optics


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
  • Lasing 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.

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Ukraine Aerospace and Defense Trade Development and Promotion