„The defence industry is a strategic industry that has not received enough attention so far. In recent years, we have taken decisive steps in this area. First of all, together with other ministries, we have developed a roadmap and action plan for the development of the defence and security industry. This will increase the competitiveness of the defence industry, attract investment, and promote innovation in this field. We have put in place measures worth more than EUR 36 million to achieve this goal. This will allow us to make better use of the industry’s potential and help companies in this sector to grow,“ said Aušrinė Armonaitė, minister of the economy and innovation.
To improve conditions for companies in the defence and security industry, the Ministry of the Economy and Innovation has initiated amendments to relevant laws. This year, amendments to the laws were adopted to facilitate the development of large defence industry projects by simplifying and facilitating the start of defence industry activities in Lithuania in the shortest possible time. Last year, amendments to the law were adopted to allow defence industry companies to operate in free trade zones. This will encourage more companies, including foreign ones, to invest in the defence sector.
This year, the German defence giant Rheinmetall is starting operations in Lithuania and intends to build a munitions factory. The project has been granted the status of a project to meet the urgent needs of national security and defence. The investment will amount to more than EUR 180 million and create at least 150 jobs. Discussions with other defence industry companies from other NATO countries are currently underway to explore the possibility of operating in Lithuania. The arrival and investment of major global defence companies in Lithuania will contribute to the growth of the sector.
The Ministry of the Economy and Innovation has also drafted amendments to the laws to remove excessive restrictions on the production of weapons parts and to facilitate the recruitment of workers in this field.
The promotion of defence innovation is one of the main areas of development of the Lithuanian defence industry. This year, defence innovation vouchers were introduced as a new instrument for the development of advanced defence products. Companies will receive vouchers worth up to EUR 30,000, which they can use to purchase innovative services from research institutions or mature innovators to create and develop defence technologies in line with the priorities set by the Lithuanian Armed Forces.
The MILInvest venture capital fund worth EUR 13 million, designed to help defence start-ups grow, contributes to strengthening the defence innovation ecosystem. The Innovation Agency plans to set up a defence innovation inter-institutional cooperation platform MilTech Lab to promote the development of innovative defence and dual-use products and provide testing and other services for new military technologies.
Lithuania is also an active participant in international defence innovation initiatives. The country has joined the NATO Innovation Fund for deep tech, which enables defence start-ups to receive funding for the development of advanced products. It also joined NATO’s Defence Innovation Accelerator DIANA programme. The 2023 DIANA challenge programme received 17 applications from Lithuania and two start-ups were selected for the programme.
There are 85 organisations in the defence sector: 79 companies and 6 education and studies institutions. Most of the products produced in Lithuania are exported; the main markets are NATO countries (Germany, France, UK, USA) as well as Israel, Ukraine, etc.