In 2026, Ukraine formally opened its arms export market, but private manufacturers are finding it difficult to take advantage of the new opportunities. The simplified procedure launched in the summer has effectively failed to function, and the fees set by the government make foreign sales economically unviable for many companies. At the same time, Ukrainian manufacturers are actively developing joint ventures abroad and are already receiving orders from foreign defense ministries — including the Pentagon and Japan’s Ministry of Defense.
Strict controls
In no civilized country can a manufacturer freely and without oversight sell military products to foreign clients. Every shipment passes through a state licensing system — Ukraine is no exception.
The state verifies what is being exported, to whom, and for what purpose. The goal is to ensure that weapons do not fall into enemy hands or appear in the arsenals of sanctioned countries. Beyond state oversight, international monitoring instruments are also in place, including the Missile Technology Control Regime (MTCR). It sets restrictions on the transfer of missile systems, unmanned aerial vehicles, and related technologies — including those capable of delivering a payload of 500 kg over a range of 300 km. Control criteria also apply to other systems.
In simplified terms, the control process in Ukraine works as follows:
- A company must obtain the appropriate authorization to export military goods and become a subject of international transfers in the prescribed manner.
- An international transfer of products requires a permit from the State Export Control Service (SECS)..
- During the review of an application, the destination country, end user, intended use of the product, and its potential impact on Ukraine’s defense capability are all examined. For certain cases (for example, supplying critical goods to countries outside the list of partner states), approval from the Interdepartmental Commission on Military-Technical Cooperation and Export Control Policy is required.
- The transfer of military technologies requires separate oversight. This entails an independent permit from the State Export Control Service, the provision of state guarantees by the importer, and payment of a state fee amounting to 20% of the value.
Two routes, one problem
Following the start of the full-scale invasion, Ukraine did not introduce a blanket legislative ban on the export of all military goods. However, the state did change its approach to such operations: ensuring the needs of the Defense Forces became the priority. As a result, manufacturers’ ability to sell finished weapons abroad was significantly curtailed.
An attempt was made to change the situation in February 2026, when an updated Interdepartmental Commission on Military-Technical Cooperation and Export Control Policy began operating. Its mandate is to review manufacturer applications and determine which products may be permitted for export without compromising the country’s defense capability.
In October, commission head Davyd Aloyan reported that more than 450 applications had been reviewed during that period, with over 90% approved — including more than 20 for the export of finished products. The majority of applications concerned components or services; finished goods remain few in number.
For private manufacturers, the government adopted Resolution No. 875 on 1 July: a so-called fast track for Drone Deal member countries. Under the resolution, the processing time for export applications was reduced from 90 to 30 days, and a separate Cabinet decision is no longer required.
However, conditions apply: the minimum value of an export transaction involving finished products is UAH 15 million (approximately €300,000). This threshold does not apply to components and parts. The fee is 20% of the value for finished products and 30% for components. Payment must be made in advance, with no refund in the event of a rejection.
The market has not embraced this mechanism. Manufacturers surveyed by AIN describe the fee as prohibitive. Maksym Zubenko of CGO Dwarf Engineering noted that over the past three months manufacturers had not received a single permit, and that for many products the fee “eats up all the margin.” Tetiana Uzhvii, head of exports at BlueBird Tech, warned that the fee makes small test batches — the typical starting point for foreign buyers — impossible. She proposed an alternative: 10% and a flexible minimum.
According to Ihor Fedirko, Executive Director of the Ukrainian Arms Council, approximately 95% of approved applications go to state enterprises. The private sector, it should be noted, accounts for around 70% of the defense-industrial complex.
Who has already bought Ukrainian weapons
The first confirmed export of finished combat drones involved the F10 FPV strike drones made by F-Drones. The SECS permit was issued on 1 July 2026 under the general procedure — that is, before Resolution No. 875 entered into force. The buyer was the US Army, and the contract is linked to the Pentagon’s Drone Dominance program. In October, the US ordered an additional 1,320 F10 units, and the manufacturer is awaiting a new export permit.
In early October, Defense Minister Shinjiro Koizumi announced the purchase of interceptor drones from the Ukrainian company SkyFall. The quantity and value were not disclosed publicly, and Tokyo emphasized that it primarily wants to study Ukraine’s rapid technology-improvement cycle.
It is also known that Berlin is preparing to purchase Bars missiles for trials in the Bundeswehr in early 2027. A deal for the first batch could be signed within weeks, with the order expanding to several hundred missiles if testing is successful. Should this happen, it will be the first purchase of Ukrainian-designed offensive weapons for the German armed forces. Notably, the Bars missile — with a range of up to 1,000 km — is already being produced in Germany through a joint venture, and the first Berlin-funded batch was delivered to the Armed Forces of Ukraine in October.
Export without exporting
According to Wiseboard Defense estimates, as of 30 September 2026, 51 agreements on the joint production of Ukrainian defense products abroad had been recorded. At the same time, only six projects had reached serial production, while 22 remained at the memorandum or letter-of-intent stage.
There is, however, a problem: joint venture products are also subject to the fee, and a zero rate for them is still only under discussion. In October, the Verkhovna Rada passed at first reading Draft Law No. 15400: all revenue from permit fees would be directed to a special fund of the Ministry of Defense — split equally between equipment and military personnel pay. The law has not yet been finally adopted.
Why is the process stalling?
The government’s logic is understandable: the Defense Forces come first, and only “surplus” can be sold. The problem lies in the scale of that surplus. According to the National Security and Defense Council’s assessment, production capacity in 2026 stands at approximately $55 billion, while according to Forbes and LB.ua, domestic orders amount to no more than $15 billion. The Arms Council estimates excess capacity at over 60%. The gap runs to tens of billions of dollars — far more than the budget can cover.
Market concerns compound the security reservations. Fedirko points out that some armored vehicle manufacturers have found it cheaper to assemble their products in Europe. European governments protect their own industries, and foreign armies are buying Ukrainian drones mostly for experimental units.
In Fedirko’s assessment, foreign armies cannot simply procure any new system: its use must align with military doctrine and the specific needs of particular units. Ukrainian manufacturers are therefore often forced to begin with experimental purchases and to seek partners within local defense ecosystems.
A separate challenge for long-range systems involves Ukraine’s international obligations under the MTCR. The export of long-range developments requires a separate assessment of compliance with Ukraine’s international commitments.
The price of delay is relocation. Fedirko warns that if the state does not make exports simpler and more accessible and does not establish a policy of international cooperation, Ukrainian Defense Tech could shrink to just 10–20 companies approximately one year after the war ends.
