Canada has published its first comprehensive Defence Industrial Strategy, Security, Sovereignty and Prosperity, establishing a long-term framework to strengthen national security, expand the domestic defence industrial base and drive economic growth through defence procurement and innovation.
The strategy, launched by Prime Minister Mark Carney in Montréal, marks a generational shift in Canada’s approach to equipping the Canadian Armed Forces (CAF) and supporting the country’s industry.
The strategy arises against a backdrop of evolving global threats, supply chain fragility and what government ministers describe as the erosion of the post-Cold War international order. Ottawa’s position is that Canada must reduce reliance on foreign suppliers and build sovereign capability to ensure that the CAF has secure, reliable and timely access to essential equipment and services.
At its core, the strategy positions Canada’s defence industry as a critical pillar of national security and economic resilience. Government figures assert that the defence sector already comprises nearly 600 firms, generates more than 81,000 jobs and contributes close to CAD 9.6 billion to gross domestic product. The strategy seeks to expand that footprint significantly as part of a broader “build in Canada, partner with trusted allies, and buy off-the-shelf where necessary” philosophy.
Strategic Framework and Institutional Reform
Central to the strategy is the Defence Investment Agency (DIA), an organisational reform intended to consolidate and accelerate defence procurement. The DIA, which is to become a stand-alone entity in 2026, will streamline processes, reduce bureaucratic barriers and provide clearer, more predictable demand signals for industry. It also aims to act as a single point of engagement for defence acquisition across government departments.
Procurement will follow a BUILD–PARTNER–BUY framework. Under this model, Canadian suppliers and materials will be prioritised where sovereign capability exists or can be developed. In areas where domestic production is not feasible, Ottawa will pursue joint development or co-production with trusted allies. Only after those options have been exhausted will Canada procure off-the-shelf equipment, and then under conditions designed to ensure economic benefit and sovereign control over sustainment and intellectual property.
Officials emphasise that this shift is designed to speed delivery times, reduce supply chain risk and cultivate “national champions” capable of competing globally while underpinning sovereign capability.
Five Pillars of Industrial Strategy
The Defence Industrial Strategy structures its objectives around five foundational pillars:
- Renewing Relationships with Industry: Enhanced engagement mechanisms, long-term demand forecasting and accelerated security clearances are intended to reduce barriers for industry participation, especially for small and mid-sized enterprises.
- Strategic Procurement: The DIA will implement the BUILD–PARTNER–BUY approach, and a modernised Industrial and Technological Benefits policy will ensure that foreign procurements deliver returns to the domestic supply chain.
- Investing in Innovation: Canada will support research and development across defence and dual-use technologies, including frontier areas such as artificial intelligence, quantum and autonomous systems. A new Defence Platform at the Business Development Bank of Canada will provide targeted capital to firms, complemented by export promotion.
- Securing Supply Chains: Efforts will focus on critical inputs such as steel, aluminium and strategic minerals, as well as reinforcing domestic production capacity for key defence components.
- Working with Domestic Partners: Collaboration with provinces, territories and Indigenous communities is highlighted, particularly in addressing security and industrial opportunities in Canada’s North and Arctic regions.
Economic and Security Outcomes
Ottawa forecasts that, by 2035, Security, Sovereignty and Prosperity will unlock approximately CAD 180 billion in direct defence procurement investment, CAD 290 billion in defence-related infrastructure and an additional CAD 125 billion in downstream economic activity. The government claims this investment will increase Canadian defence exports by 50 per cent, raise the share of procurements awarded to domestic firms to 70% and create up to 125,000 high-paying jobs across the Canadian economy.
The strategy also aligns with Canada’s broader defence commitments, including a pledge to invest 5% of gross domestic product in defence and security by 2035 as part of NATO readiness goals.
Canadian Prime Minister Mark Carney said: “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.”
Pic credit: Lea Kim
