Ukraine’s private defense industry has secured no more than 10 small export contracts since Kyiv announced the return of controlled arms exports last year, according to Ihor Fedirko, executive director of the Ukrainian Council of Defence Industry.
The first permits were issued earlier this year, but only one overseas joint venture is operating.
No permits have been granted under Resolution No. 875, a simplified wartime export procedure adopted in July that introduced a 30-day review period, streamlined applications involving partner countries, and allowed certain technology transfers.
Industry Concerns
Fedirko said the procedure’s costs and conditions make exports financially unattractive or too risky for manufacturers.
Applicants must pay 20 percent of the value of finished products and technologies, or 30 percent for components, before authorities consider their request. He said there is no clear refund mechanism if permission is denied.
The simplified procedure is available only for contracts worth at least 15 million hryvnias ($337,000), although the threshold does not apply to components.
Fedirko said this excludes many pilot orders because foreign customers typically purchase a small number of units for testing before committing to a larger contract.
Even eligible exports may be denied or suspended for up to 30 days if the Defense Ministry or another state customer intends to purchase the same product.
The rule prioritizes Ukraine’s military requirements, but the state is not required to complete the purchase. If no government contract is signed within 30 days, the manufacturer may submit a new export application.
Fedirko said the Defense Ministry had begun consultations and was expected to present revisions in early September.
Production Capacity
The limited export activity comes as Ukraine’s defense industry develops more production capacity than domestic funding can fully support.
Potential output could reach $55 billion this year, according to the National Security and Defense Council, up from an estimated $35 billion in 2025.
Funding has not kept pace. President Volodymyr Zelensky said last year that around 40 percent of the country’s defense production capacity lacked adequate financing.