Since Russia’s full-scale invasion in 2022, Ukraine’s drone industry has emerged as a key pillar of the country’s defense innovation apparatus. Drones have helped Ukraine enhance self-reliance amidst shortages of Western ammunition and adapt to an evolving battlefield. Beyond strengthening domestic defense capabilities, Ukraine’s drone industry has the potential to shape the global market for defense drones—potentially even autonomous ones—in the long term. 

Numerous headlines have captured Ukraine’s use of autonomous systems, but there is more to the story—requiring a deep dive into the available data to unpack the country’s growing industry, highlighting the greatest successes and challenges that will need to be addressed in the long term. Ukraine’s drone industry has demonstrated remarkable growth in drone production capabilities, technological advancements, and investments. To maintain its competitiveness and shape the global drone market in the long term, Ukraine needs to enhance its contracting capabilities, ensure standardization of drones, and secure investments in research and development (R&D) and production.

Analyzing the Data: Ukraine’s Booming Drone Industry

Over the past three years, Ukraine’s drone industry has experienced a dramatic transformation. Once nearly nonexistent, it has evolved into a sector with skyrocketing production capacity, an expanding base of domestic manufacturers, and increasing technical sophistication of products.

The industry has witnessed a remarkable increase in the range and volume of domestically produced autonomous systems. At the onset of Russia’s full-scale invasion, Ukraine relied on Chinese-manufactured drones. Today, Ukraine produces aerial and naval drones, including First Point View (FPV), bomber, interceptor, kamikaze, reconnaissance, and long-range deep-strike drones.

Graph generated by author using Datawrapper, with information from the following sources: Slovo i Dilo, Defense Express, Suspilne Media

According to Ukraine’s Defense Minister, this progress has transformed the country into the world’s largest producer of tactical and long-range uncrewed vehicles. For example, Ukraine’s FPV drone production skyrocketed from a few thousands in 2022 to more than two million units in 2024.As a result of this growth, domestic production supplied the vast majority of drones Ukraine used in 2024.

Graph generated by author using Datawrapper, with information from the following sources: Unian

This increase in the volume of drones produced has also bolstered Ukraine’s monthly manufacturing capacity. Rising investments, improved supply chains, and more efficient manufacturing processes have increased the monthly FPV drone production capacity from 20,000 in 2024 to 200,000 in 2025. Reflecting on this production boom, President Zelensky stated in February 2025 that Ukraine is capable of producing 4 million drones annually.

Graph generated by author using Datawrapper, with information from the following sources: Army Inform

Behind this incredible growth is a robust industrial base. Hundreds of new companies have entered the booming defense tech market to meet the demand for uncrewed vehicles. According to the Minister of Digital Transformation, approximately 500 drone manufacturers operate in Ukraine as of 2025—a striking growth compared to just seven domestic manufacturers prior to the full-scale invasion. And these firms have made progress toward component localization—i.e., developing the capacity to produce not only the drones but also the components upon which they rely. For example, drone producer Vyriy sources 70% of its components domestically; and this March, the company announced that it released the first batch of 1,000 drones built entirely from domestically produced major components, including frames, flight controllers, initiation boards, radio control systems, video transmitters, supplies engines, and thermal cameras. Such commitment to domestic component manufacturing on a larger scale can reduce vulnerability to geopolitical and supply chain risks, improve resistance to electronic warfare (e.g., by fine-tuning drones to operate on specific frequencies), and facilitate a more independent warfighting machine. Moreover, the Ukrainian government has taken steps to incentivize component localization: those manufacturers that increase domestic component production to more than 50% of the value of all components can secure long-term government contracts. 

Greater Effectiveness and Efficiency

At the same time, the effectiveness and efficiency of Ukrainian drones have also steadily improved. Data on the success rates of Ukrainian drones varies, which suggests their efficiency depends on drone type, deployment context, and drone operators’ skills. Wired reports that success rates for high-quality Ukrainian drones have risen from 30% in 2022 to 70% in 2024. However, a RUSI report claims that 60–80% of FPV drones fail to reach their targets, often struggling against armored vehicles despite their effectiveness against infantry. Nonetheless, short-range tactical drones contribute to 60–70% of Russian equipment losses. Another measure includes drone effectiveness in striking targets within Russia. In 2024, the Ukrainian Armed Forces carried out 130 long-range operations, hitting 377 key infrastructure targets in Russia, including military bases, ammunition depots, defense industry facilities, oil refineries, and energy infrastructure. In April, Commander-in-Chief Oleksandr Syrsky reported a 22% increase in targeting success for February 2025 compared to the previous month, largely driven by FPV and bomber drones. 

More analysis is necessary to determine the primary drivers of this greater effectiveness and efficiency. Increasing technical sophistication and quality are certainly a major contributor. But quantity has a quality of its own. Indeed, Valery Borovyk, head of the “Bily Orel” drone unit, attributed the rise in success rates more to the growing quantity of deployed drones than to improved precision. According to him, the relative effectiveness of FPV drones is declining as Russian electronic warfare (EW) systems grow more advanced, making it more difficult to evade detection and disruption. 

Therefore, industry must continue to pursue both greater quality and quantity of domestically produced drones. Quality is especially critical to address the accelerating autonomy arms race—as every drone innovation is met with new countermeasures, manufacturers must continue to invest  in technical upgrades. Ukrainian officials have recognized this imperative by promoting the development of new models, including fiber-optic and AI-guided drones that are more resistant to EW. Moreover, the aforementioned disparity in drone performance highlights the ongoing need for operator training and more coordinated deployment strategies, which will continue to improve overall quality and effectiveness. But in the meantime,  quantity is essential to offsetting Russian mass and ensuring continued success rates on the battlefield.

Defense Tech Ecosystem

To scale up production capabilities and further foster innovations, the Ukrainian government is developing its defense tech ecosystem. In July 2022, the government launched the Army of Drones strategy to accelerate the indigenization of Ukraine’s drone industry. What followed was Brave1, a government initiative designed to support defense tech startups and projects. Since its launch in 2023, Brave1 has issued over USD 8 million in grants and helped manufacturers secure additional investments. The program currently includes 1,500 defense tech companies working on 3,500 products, with state budget funding available for R&D and product development. As of February 2025, Brave1 has awarded more than 470 grants, totaling 1.3 billion Hryvnia (UAH). Reflecting on this defense tech boom, the Ukrainian government is now positioning the country as a future Silicon Valley of defense technology capable of attracting international developers, innovators, and investors. To build on these successes, Ukraine’s new global innovation strategy has also identified uncrewed vehicles as one of top priorities for expanding the country’s long-term technological and economic potential.

Ukraine’s production growth and innovation, driven by the urgent need for self defense, ingenuity of local engineers and manufacturers, and supportive government policies are transforming the country into a rising global hub in the drone industry. However, the same data that highlights this progress also reveals critical areas that must be addressed to sustain and scale this momentum in the years ahead.

Persistent Challenges

The rapid growth of the total number of drone manufacturers (500) and government contractors (around 100) has encouraged innovation and competition. However, it also signals that the expanding market will soon require stricter quality standards and regulation. As a result, not all manufacturers are likely to endure the initial phase of development.

Another challenge is the surplus of supply, given the rapid increase in Ukraine’s drone production capacity. While grassroots organizations and volunteers purchase drones along with the government, this purchasing capacity still falls short of meeting the available supply. According to the coalition of Ukrainian defense tech manufacturers Tech Force in Ukraine,  Ukrainian manufacturers of electronic warfare systems and drones were operating at 37% capacity in 2024 because of the lack of government contracts. Given this challenge, the Ukrainian government is now considering possible scenarios for opening its arms exports market. The three possible scenarios include approving export contracts individually, allowing partial exports tied to domestic contract volumes and directing part of the revenue to purchasing weapons for the Armed Forces, and introducing an export duty that would fund weapons purchases for the Ukrainian Armed Forces.

Security risks also remain persistent. The growing market will require safeguards against sabotage and industrial espionage and defense against Russian missile strikes—issues that Ukrainian defense executives identified as critical. In response, some manufacturers are decentralizing production across multiple sites to reduce vulnerabilities. Looking ahead, securing production infrastructure will be essential not only for sustaining manufacturing during wartime but also for attracting long-term investment and maintaining international confidence in Ukraine’s defense industrial base. However, such measures cannot be comprehensive—as long as the war endures and Russia continues its missile and drone attacks, security risks will persist.

Beyond production and security considerations, R&D and intellectual property development lag behind grassroots innovation. Despite the rapid expansion of drone production, Ukraine lags in patent filings. The low number of drone-related patents filed between 2022-2023 is particularly stark given the 16% global increase in drone-related patents from 16,800 in 2022 to 19,700 in 2023. To remain competitive in the defense sector and use the drone industry for economic recovery, Ukraine will need to decrease the gap between its production capacity and long-term innovation. 

Graph generated by author using Datawrapper, with information from the following sources: Mathys & Squire

And lastly, despite increasing government allocations for defense tech, the industry’s future remains reliant on foreign investments. Domestic funding falls short of meeting the growing demand for drones.

Graph generated by author using Datawrapper, with information from the following sources: Ukrinform

The 2025 budget covers only half of the drones offered by Ukrainian manufacturers, which prompts the government to seek additional funding sources. The reliance of the drone industry on foreign funding reflects a broader trend of the sources of funding for Ukrainian defense technology production.

Graph generated by author using Datawrapper, with information from the following sources: Suspilne Media citing President Volodymyr Zelensky

According to declassified documents, the Biden administration allocated USD 1.5 billion to enhance Ukraine’s drone production. As the new U.S. administration shifts its foreign policy priorities, Ukraine will likely need to seek increased funding support from its European partners and attract more private investments.

Strengthening the Internal Market and Ensuring Global Competitiveness

Ukraine’s drone industry has demonstrated impressive growth in production capacity, innovation, technical sophistication, and the emergence of a broad base of domestic manufacturers. At the same time, it needs to address weak contracting mechanisms, lack of standardized quality benchmarks, and long-term investment in R&D and advanced technologies. The Ukrainian government must take concrete steps to build on existing  strengths—Ukraine’s innovation potential and manufacturing scale—while addressing these structural gaps. By improving procurement processes, establishing robust standards, and prioritizing R&D and intellectual property investment, Ukraine can solidify its domestic industry and position itself as a competitive player in the global drone market. 

First, while Ukraine’s arms exports market is closed, the government will need to scale up its contracting capabilities to match supply and demand. Extending the duration of government contracts from one year to two or three will help manufacturers to plan production cycles. For instance, in the U.S. defense sector, predictable and longer procurement cycles enable firms to make informed decisions about hiring, capital expenditures, and supply chain development. By adopting longer contracting periods, the Ukrainian government can offer manufacturers the confidence needed to upscale operations, develop specialized tooling and workforce, and ensure predictable production cycles. 

Second, as Ukraine’s drone industry matures, the government will need to establish production and performance standards to ensure quality, interoperability, and battlefield reliability. Early regulation risks stifling innovation and experimentation, but the current phase of drone development makes standardization necessary for upscaling. Both military and industry experts have flagged this issue and noted that the variety of drone models can lead to inconsistent quality and complicate efforts to scale production efficiently. Standardization would help streamline manufacturing processes, enable better integration across producers, and ensure that domestically produced drones meet frontline demands. At the same time, standardized production will also be crucial for expanding exports, particularly if Ukraine aims to align with NATO and EU requirements and compete in international markets.

Third, Ukraine will need to strike a balance between mass-producing affordable FPV drones and investing in next-generation technologies such as fiber-optic systems, AI-guided drones, and drone swarms. On the battlefield, these advancements offer greater resilience against electronic warfare and can boost targeting precision and efficiency. Beyond the front lines, this innovation will enhance the appeal of Ukrainian drones to international customers that might be interested in deploying drones in different environments. Recognizing this need, the government has prioritized high-tech drone development for 2025, signaling a shift to more advanced technologies to enhance effectiveness and to position Ukraine as a competitive actor in the global market.

Finally, Ukraine will need to secure long-term investments in R&D and patent activity to sustain innovation. A network of R&D centers will allow Ukraine to move up the value chain and attract tech talent. To achieve this, the government can establish dedicated innovation funds or public-private grants targeting early-stage technologies. Ukraine can also incentivize R&D through tax credits or subsidies for companies that invest revenues into research, prototyping, and testing. In addition, the government could encourage collaboration and knowledge exchange between universities, defense startups, and established manufacturers through joint labs or defense tech accelerators. The government should also streamline the patenting process and help companies navigate international patent protections. This will not only protect Ukrainian developments but also signal the maturity and credibility of its defense tech sector to foreign partners and investors. 

To achieve these goals, sustained support from Western partners, particularly the EU and key NATO allies, will remain essential. One avenue includes cooperation with European defense initiatives, such as the EU’s European Defence Fund through joint ventures and contracts. Ukraine can also look into positioning itself as a partner of NATO’s Defence Innovation Accelerator for the North Atlantic (DIANA) and explore other opportunities for enhanced partnership with NATO writ large. At the same time, Ukraine should strengthen its appeal to private investors by offering co-investment opportunities in drone-related technologies and promoting legal protections for intellectual property. 

Resilience and Leadership: the Road Ahead for Ukraine’s Drone Industry

In just three years, Ukraine’s drone industry has transformed from a nascent sector into a dynamic ecosystem of manufacturers, innovators, and investors contributing to national defense. This progress not only helps Ukraine resist Russian aggression but also positions the country as a future global leader in autonomous warfare. Sustaining this momentum will demand production improvement, strategic investment, and long-term planning.

By extending procurement cycles, standardizing production, and boosting R&D and intellectual property, Ukraine can bridge the gap between rapid wartime growth and lasting industrial resilience. With targeted policies and continued support from Western allies, Ukraine can turn its drone industry into a cornerstone of economic recovery and a competitive player in the global defense market. In a world where the future of warfare is increasingly unmanned, Ukraine’s ability to lead in drone innovation is not only a matter of national survival but also a strategic opportunity.