Ukraine is on the verge of establishing three additional joint ventures with European arms manufacturers as part of its strategy to enhance military production amid the ongoing conflict with Russia, according to the first deputy prime minister.

Yulia Svyrydenko, who also serves as the economy minister, noted that five joint ventures with Western defense firms have already been formed, including partnerships with companies from Germany and Lithuania. Numerous arms manufacturers have also set up operations in Ukraine.

“We are in the final stages of negotiating three more agreements with European firms to create joint ventures,” Svyrydenko stated during an interview with Reuters at the government headquarters in central Kyiv. She did not provide specifics regarding the new ventures or the anticipated investment levels.

The military industrial sector in Ukraine has experienced significant growth, with both state and private enterprises rapidly scaling up production and innovating in response to Russia’s full-scale invasion that began in February 2022.

The authorities remain reticent regarding specifics of the defense sector; however, President Volodymyr Zelenskiy indicated in October that Ukraine has the potential to manufacture four million drones each year and is increasing its military production capabilities, which include missiles, a “drone missile,” and transport vehicles.

To sustain this progress, the government has attracted foreign investment and technology to enhance domestic arms production, thereby increasing the supply of ammunition and equipment for use in combat against a larger and better-equipped adversary.

Germany’s defense leader Rheinmetall has already established its first factory in Ukraine, focusing on the maintenance of combat vehicles, with intentions to begin producing Lynx infantry fighting vehicles by the end of the year.

Companies such as BAE Systems from the UK, Franco-German KDNS, Babcock, a defense and aerospace firm, and MyDefence, which specializes in counter-drone solutions, have partnered with Ukrainian manufacturers and opened local offices.

German arms manufacturer Flensburger Fahrzeugbau Gesellschaft is collaborating with a private Ukrainian defense producer to establish a service center in Ukraine, according to Svyrydenko.

She noted that enhancing domestic defense manufacturing has positively impacted the overall economy, which, despite experiencing two years of growth, remains below pre-war levels.

In the first half of 2024, the defense production industry represented 1.8% of the nation’s gross domestic product, a significant increase from 0.3% in 2021, she added.