What is Canada's new Domestic Defence Industrial Strategy?
The Canadian government has launched its first Defence Industrial Strategy to overhaul how the nation invests in military capabilities. Prime Minister Mark Carney announced the plan, which seeks to prioritise Canadian suppliers and materials while streamlining procurement processes.
The strategy arrives as Canada moves to meet its 2% NATO spending target this fiscal year.
The initiative addresses long-standing complexities in defence acquisition that resulted in a reliance on international providers. By shifting focus toward domestic industries, the government intends to scale operations in the aerospace, cyber and maritime sectors.
Officials project that the strategy will support 125,000 careers and increase defence exports by 50% over the next decade.
Under the new framework, the government aims to raise the share of defence acquisitions awarded to Canadian firms to 70%. This shift is expected to grow industry revenues by 240%.
Serviceability targets for military equipment have also been established, with goals of 75% for maritime fleets, 80% for land fleets and 85% for aerospace fleets within ten years.
Central agency to lead procurement reform
A new Defence Investment Agency (DIA) will serve as the primary vehicle for these changes.
The DIA is designed to reduce administrative barriers and accelerate the delivery of equipment to the Canadian Armed Forces (CAF). The agency will focus on manufacturing and partnerships with Canadian businesses, including small and medium-sized enterprises.
The strategy organises federal efforts into five pillars. The first pillar prioritises domestic production in areas such as shipbuilding, digital technologies and land systems.
When domestic production is not feasible, Canada will seek partnerships with allies or purchase equipment with conditions that require reinvestment into the Canadian economy.
To support this transition, the government is establishing a permanent Defence Advisory Forum and a Science and Research Defence Advisory Council.
These bodies will facilitate communication between the state and the private sector. Additionally, the government will station trade commissioners in the United Kingdom and the European Union to promote Canadian defence products in international markets.
Funding and innovation hubs
The financial scope of the strategy includes CAN$180bn (US$131.4bn) in procurement opportunities and CAN$290bn (US$211.7bn) in capital investment over 10 years. To ensure businesses have access to necessary funds, a CAN$4bn (US$2.92bn) Defence Platform will be created at the Business Development Bank of Canada.
Specific investments target the development of emerging technologies. This includes CAN$105m (US$76.6m) for a Drone Innovation Hub at the National Research Council and CAN$459m (US$335m) for an aircraft research platform.
A new entity, the Bureau of Research, Engineering and Advanced Leadership in Innovation and Science (BOREALIS), will coordinate work on artificial intelligence, quantum computing and space technologies.
Prime Minister, Mark Carney, says: “The work of defending Canada is the work of building Canada. Security and prosperity are mutually reinforcing foundations of the true North, strong and free.
"Our new Defence Industrial Strategy ensures Canada remains a sovereign nation, in charge of its own destiny. That’s Canada strong, and that’s what we are building, together."
The strategy also includes a focus on the defence workforce through a new Skills Agenda.
This programme will work with provinces, territories and Indigenous rights holders to address labour needs. Initial investments this year will focus on increasing production capacity for nitrocellulose to support artillery requirements.
Legislation to establish the DIA as a standalone entity is expected this spring.