--- title: "Weapons Export on Pause: Why Ukraine’s Defense Industry Cannot Unleash Its Export Potential" description: "Ukraine's defense complex has failed to unleash its export potential: despite procedural simplifications in 2026, companies are hesitant to apply due to high tax rates and unresolved fund-distribution issues." date: 2026-10-30T05:10:37.455Z lang: en url: https://xab.info/en/posts/ukraine-weapons-export-pause-defense-industry tags: [ukraine, weapons-export, defense-industry, drone-deal, military-production, ukr-opyk] author: "Andrey Kosynko" publisher: "XAB.info" --- # Weapons Export on Pause: Why Ukraine’s Defense Industry Cannot Unleash Its Export Potential ![A man in a cap assembling a drone against the backdrop of the Verkhovna Rada building and a factory](https://xab.info/media/2026/10/30/ukraine-weapons-export-pause-defense-industry/ukraine-weapons-export-pause-defense-industry-1.webp) ## Key Points - Export procedures were suspended in 2022 and resumed only in 2026 after rule simplifications - The review period for export applications was reduced from 90 to 30 days, with a minimum threshold of 15 million hryvnias - Financial barrier: 20% of finished products and 30% of components are directed to the budget - Companies are hesitant to apply; some manufacturers are only just forming export teams - The industry supports directing export revenues to Defense Forces needs but highlights the heavy burden The development of arms exports has become one of the key topics discussed by Ukraine's defense industry since early 2026. However, despite high-level rhetoric and administrative simplification, substantial progress in this economic direction has yet to occur. RBC-Ukraine spoke with key defense industry associations and market players to identify the main problems and understand what to expect in the near future. ### From Suspension to Launch: The Chronology of Export Policy Following the full-scale invasion in 2022, export procedures were effectively suspended. The state saw risks to national security in exports and lacked a clear understanding of how to balance frontline needs with the production capacities of Ukrainian enterprises. Talks about resuming exports only began in the fourth year of the war. President Volodymyr Zelenskyy officially 'launched' arms exports in February 2026, though the process proved complex. Subsequently, the procedure had to be streamlined: then-Defense Minister Mykhailo Fedorov announced new rules for the industry in July, which were developed in parallel by teams from the Ministry of Defense and the National Security and Defense Council under the leadership of Rustem Umerov. ### What Changed: New Rules of the Game The main changes concern deadlines and thresholds. The review period for export applications has been reduced from 90 to 30 days. A lower price threshold for technologies and weapons has been set at 15 million hryvnias. Partner countries in the Drone Deal program, with which Ukraine has intergovernmental agreements, have gained the opportunity to purchase Ukrainian weapons and technologies and work directly with manufacturers. At the same time, it is emphasized that the needs of the Defense Forces must be met first: if certain weaponry is required by the army, an export permit may be denied. In October, Deputy Defense Minister Hanna Hvozdiar stated that the export potential of Ukraine's defense industry and the supply of the Defense Forces are interconnected priorities, and 'controlled export is not about weapons instead of the front, but about an additional resource for the army, the development of manufacturers, and more Ukrainian weapons in the future.' ### The Financial Barrier: The Main Brake for Manufacturers An additional financial barrier remains one of the key obstacles. Resolution No. 875 sets rates requiring 20% of the value of finished products and 30% of components to be paid into the budget. According to calculations by Ihor Fedirko, executive director of the Ukrainian Council of Weapon Makers, with a calculation base of one million dollars, the payment would amount to 200,000 or 300,000 dollars. Meanwhile, the company still has to pay for production, logistics, testing, and warranty maintenance. This levy reduces the funds remaining for the manufacturer or forces them to raise the price for the buyer. The 30% rate for components is particularly sensitive, making the contract economics unprofitable for many enterprises. Bill No. 15400, supported by the Verkhovna Rada, proposes determining the mechanism for distributing export revenues for the needs of the Defense Forces, but the tax rates themselves remain a subject of industry debate. ### Companies Are Hesitant: Expectations vs. Reality Despite state signals about opening exports that manufacturers received over the past year and which generated high expectations, companies are in no hurry to submit applications. Some new manufacturers are still only forming their export teams. Market players interviewed note that export restrictions in previous years hindered enterprise development, scaling, and the ability to offer the military cheaper and technologically advanced products. Opening exports earlier would have benefited both manufacturers and the state: it would mean additional working capital, R&D investments, faster production scaling, and lower product costs for the Defense Forces. At the same time, it is important to distinguish between international cooperation and full-scale exports: as a rule, foreign production sites supply products directly to the Defense Forces rather than to the external market. ### Prospects: What's Next According to Tech Forces of Ukraine, over the years of war, manufacturers have proven that their unconditional priority remains supplying the Ukrainian army, which is the primary and largest customer. Therefore, exports are viewed not as an alternative to domestic supplies, but as an additional channel for financing and development. However, until the financial burden on manufacturers is reviewed and administrative procedures are finalized, the export potential of Ukraine's defense industry risks remaining on paper. The industry is waiting not only for political signals but also for concrete economic conditions that will make exports competitive on the international market. ## Fact-Check & Sources - [Экспорт оружия на паузе: кто тормозит процесс и что рискует потерять Украина](https://www.rbc.ua/ukr/news/eksport-zbroyi-pauzi-hto-galmue-protses-ta-1793281318.html) - Primary source. All key facts (export launch chronology, review period reduction from 90 to 30 days, 15m UAH threshold, 20%/30% rates under Resolution No. 875, Bill No. 15400, statements by Hvozdiar and Fedirko) are taken directly from the source text. ## FAQ ### When did Ukraine officially launch arms exports? President Volodymyr Zelenskyy officially launched arms exports in February 2026. Simplified procedural rules were announced in July 2026. ### What are the new conditions for export applications? The review period has been reduced from 90 to 30 days, and a minimum value threshold of 15 million hryvnias has been established. Drone Deal partner countries can work directly with manufacturers. Defense Forces needs are met first. ### What financial barrier has been set for manufacturers? Under Resolution No. 875, 20% of the value of finished products and 30% of components are directed to the budget. For a $1 million contract, this amounts to $200,000–$300,000. ### Why are companies hesitant to apply for exports? High financial pressure, the need to form export teams, and unresolved fund-allocation issues make exports economically unviable for many enterprises at this stage.