Latvian administration unveils ambitious growth strategy for the defense industry
In a bid to strengthen and modernize Latvia's defense sector, the government has unveiled a new Defense Industry and Innovation Support Strategy for the period 2025-2036. This ambitious plan, designed to bolster the country's defense capabilities, supply chain security, competitiveness, and economic growth, is set to transform the Latvian defense industry over the next decade and beyond.
The strategy, linked to the planning cycle of the National Defense Concept and the National Armed Forces Long-Term Development Plan for 2025-2028, outlines several key support measures.
**Establishment of the Defence Innovation Fund**
A cornerstone of the strategy is the establishment of the Defence Innovation Fund. This fund, designed to provide sustainable financial support for the development of defense ideas and innovations, will facilitate research and startup growth within the sector.
**Promotion of Innovation and Knowledge Transfer**
The strategy also focuses on enhancing resilience and long-term development by promoting innovation. This includes national research programs, grant competitions in military and dual-use technologies, and mentorship for startups.
**Integration of the Defence Industry with National Armed Forces**
Creating a strategic partnership mechanism and establishing guidelines for involving defense industry players in enhancing defense capabilities are key aspects of this strategy. Unified contract procedures regarding supply security requirements will also be established.
**Strengthening Military Competence and Ecosystem Development**
Activities to engage industry actors, launching funding competitions, and developing the military industry ecosystem are all part of this strategy. The goal is to create a robust and competitive defense industry that can meet the needs of the National Armed Forces.
**Research Capacity Development and Cooperation**
Supporting R&D projects in collaboration with universities and think tanks, introduction of testing and validation services, and strengthening cooperation with the European Defence Fund to support companies’ participation are also integral to the strategy.
**Support for Internal Security Innovation**
In cooperation with the Ministry of the Interior and industry representatives, the strategy aims to promote innovations enhancing internal security.
**Industrial Participation in Defense Contracts**
The strategy includes a commitment to ensuring that local companies are involved in up to 30% of large National Armed Forces contracts. For example, in recent deals such as the €81 million investment in Spike missiles, around 30% of the contract value is fulfilled by domestic industry players in alignment with the strategy.
**A Green Corridor for Defense Industry Production Capacity**
A "Green Corridor" is planned for the development of defense industry production capacity in Latvia. This initiative aims to streamline the process of setting up and expanding defense industry production facilities.
**Funding for Innovation in the Defense Industry**
Funding for innovation in the defense industry is promised to increase, reaching up to 1.5% of the defense budget in 2028 and up to 3% in 2036. This increased investment is expected to significantly increase the contribution of the defense industry to the Latvian economy.
The goal is to significantly increase the contribution of the defense industry to the Latvian economy, with the industry expected to reach 3% of GDP by 2028 and 5% by 2036.
Prime Minister Evika Siliņa has expressed her desire to strengthen Latvia's defense capabilities, supply chain security, competitiveness, and economic growth through this strategy. The Ministry of Defense is responsible for organizing and coordinating the implementation of policies to promote the development of the national defense and security industry.
The European Union is in agreement that significant investments in defense and faster development of the military industry are necessary. The largest defense procurements over the next four years will be flagged up, ensuring transparency and opportunity for local industry participation.
This comprehensive strategy, if successfully implemented, will significantly bolster Latvia's defense industry capacity, supply security, innovation ecosystem, and integration with armed forces tasks, ensuring competitiveness and sustainability over the strategy period.
[1] Ministry of Defense (2023). Defense Industry and Innovation Support Strategy for 2025-2036. Riga: Ministry of Defense. [2] Cabinet of Ministers (2023). Approved Plan for 2025-2036 to Double the National Armed Forces' Purchases from the Local Defense Industry. Riga: Cabinet of Ministers. [3] Ministry of Economics (2023). Role and Responsibilities in the Implementation of the Defense Industry and Innovation Support Strategy. Riga: Ministry of Economics.
- The establishment of the Defence Innovation Fund, part of the Defense Industry and Innovation Support Strategy, aims to offer sustainable financial support for the defense industry, fostering business growth and innovation in finance.
- As the strategy progresses, it's expected that the Latvian defense industry's contribution to the nation's economy will significantly increase, reaching up to 5% of the GDP by 2036, promoting industrial growth and financial prosperity.
