The Ministry of Defense of Ukraine has announced a significant expansion of the pool of residents under the special legal regime of state support for the defense-industrial complex, known as the Defence City cluster. According to the ministry's press service, the registry currently includes 63 domestic enterprises that receive tax, customs, and other incentives to develop the production of weapons and military equipment.
Growth Dynamics: More Than a Doubling in a Few Months
According to information provided by RBC-Ukraine citing the Ministry of Defense, the number of Defence City residents has more than doubled since the regime came into effect. At the end of May, the cluster consisted of 31 enterprises, by July their number increased to 45, and today it has reached 63. The total qualified income of all 63 residents—meaning revenue from the sale of weapons and military equipment—amounts to nearly 111.3 billion hryvnias. These figures indicate that Ukraine's defense industry is experiencing a period of accelerated scaling driven by both the internal needs of the Armed Forces of Ukraine and growing international demand.
What is Defence City and What Incentives Do Residents Receive
Defence City is a special legal regime of state support for companies within Ukraine's defense-industrial complex. Enterprises granted resident status are provided with a package of measures that includes tax and customs privileges, opportunities to relocate production facilities to safer regions, and enhanced protection of the production sites themselves from air attacks. According to Deputy Minister of Defense of Ukraine Hanna Hvozdiar, «Defence City is a systemic tool for the development of Ukraine's defense industry. We are creating conditions for manufacturers that allow them to invest in their own development, scale production faster, and develop international cooperation».
Procedure for Obtaining Resident Status
To join the cluster, an enterprise must verify its compliance with the requirements established by current legislation and submit an application to the Ministry of Defense of Ukraine along with the required package of documents. The ministry reviews the application within 10 working days. In the event of a positive decision, resident status is granted by an order of the Ministry of Defense, after which information about the enterprise is entered into the Defence City registry. This relatively short application review period allows companies to quickly gain access to support measures in conditions where production volumes need to be increased within tight deadlines.
Context: Accelerated Production Rates and the Use of Interceptor Drones
The expansion of the Defence City cluster is taking place against the backdrop of intensive use of unmanned systems by both sides of the conflict. It was previously reported that the Ukrainian military is already using seven different types of interceptor drones to intercept Shahed-type strike drones. At the same time, the enemy's industry is operating at an accelerated pace: according to available data, Russia launches jet drones against Ukraine almost immediately after they roll off the assembly line, bypassing prolonged warehousing. It is precisely under such conditions that the Defence City cluster acts as an accelerator, allowing domestic manufacturers to quickly scale up capacities, introduce new technologies, and coordinate international cooperation in the field of defense technologies.
