Ukraine Considers Wartime Drone Exports to Boost Revenues and Manufacturing

Ukraine is reportedly considering lifting current drone export restrictions to bring in extra revenue to support the country’s domestic arms manufacturing.

The Financial Times (FT), citing officials and industry participants, said the limited resources at present have prompted Kyiv to consider exporting drones, an industry that has thrived in Ukraine since Russia’s 2022 invasion.

It added that constrained capital has prevented Kyiv from purchasing available drones and investing in further research and development.

Oleksandr Marikovskyi, head of the Ukrainian parliament’s economic subcommittee investigating potential drone export regulations, said the exports can bring up to $20 billion in revenue.

The FT added that Ukraine’s state budget for weapons comprises only $6 billion, with a third already allocated to drone production.

Marikovskyi added that the current ban could lead to a brain drain and decreased tax revenues, with Ukrainian companies seeking to circumvent it by establishing facilities abroad.

Multiple sources from Ukraine’s defense industry told the FT that Kyiv lacks the funding needed to support the industry’s development.

Dmytro Khasapov, head of Ukrspecsystems, one of Ukraine’s largest drone manufacturers that has set up facilities abroad, told the FT that Ukrainian troops “have a colossal shortage of drones,” but the number of state contracts is below its production capacity since “the state does not have the means to buy it.”

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Roboneers, a Ukrainian manufacturer producing air and land drones, electronic jamming systems, and cargo transport, told the FT that state contracts were won at a price that only covers manufacturing costs.

“The biggest problem for every [Ukrainian] company is research and development,” an unnamed Roboneers representative said, adding that his company had to pay out of pocket to test lenses for the cameras equipped on the drones during development.

Industry representatives also voiced their desire for more standardization and planning by the government.

Drone expert and military commander Yuriy Kasyanov said drones currently in use operate on different software. Artem Kolesnyk, the chief technology officer at drone manufacturer Reactive Drone, said drone production requires policy direction like any arms manufacturing, or else the industry could eventually die out.

“We do not currently have a program that prepares qualified engineers in universities … We need to look at what we need in five, 10 years because if you don’t look, then this whole [drone] industry will die or be bought out by someone,” Kolesnyk told the FT.

In March, Deputy Minister of Strategic Industries Hanna Hvozdyar said Kyiv aimed to produce two million drones this year. Ukrainian President Volodymyr Zelensky said in August that contracts for a million drones had already been signed, though the actual production number at present remains unclear.