The grim but crucial target that is now essential to Ukraine

Gdansk: Ukraine is planning a funding surge for its defence industry to gain an edge over Russia in the race to build millions of drones, as it embarks on a dramatic increase in long-range strikes on enemy territory.

Ukrainian defence companies are raising record amounts of finance to expand their production lines, seeking to lift investment by 75 per cent this year and force an end to the war.

The industry goal comes at a time when the country’s Defence Ministry is aiming to deploy 7 million drones this year, highlighting the changing nature of the war and the need for larger, faster factories to secure victory.

“We are highly motivated, and we have to be faster and more flexible,” said Ihor Fedirko, the chief executive of the Ukrainian Council of Defence Industry.

“In Ukraine, everything is about the velocity, so it’s the speed of change, how fast you can develop your products, how fast you can test them.

“Also, it’s about how fast you can get feedback from our battle lines, how fast you can apply this feedback to your next product.”

Fedirko, who leads an association with 400 member companies, said the plan included raising more venture capital for small companies and working with investors, suppliers and customers outside Ukraine.

This means deals with Australian companies are now possible in ways that were restricted for years under the Ukrainian government’s export restrictions.

The export rules changed in February, when the government opened 10 offices to encourage exports after years of frustration among defence companies, who believed they could reach higher production goals with the help of customers in Europe.

Fedirko, in an interview with this masthead, said UCDI member companies raised about $US1 million ($1.5 million) in finance in 2022 and increased this to $US200 million by 2025.

He wants the industry to reach $US350 million this year, representing a 75 per cent year-on-year increase. He spoke to this masthead at the Ukraine Recovery Conference in Gdansk.

Ukraine becomes a defence powerhouse

The rise of the Ukrainian defence industry has been essential to the country’s defence since Russia’s full-scale invasion in 2022, and the sheer scale of industrial capacity reflects a government decision to allow more private companies into the sector. Where Ukraine once depended solely on American and European munitions, it now builds its own.

In one example, Ukrainian President Volodymyr Zelensky said on Saturday that the country’s defence forces fired a locally made FP-5 Flamingo missile at an oil facility in the Russian city of Volgograd. The Flamingo was developed by a private firm, Fire Point; hundreds are being made each month.

A naval tech company, Noah X, has announced a new drone boat that can travel 40 kilometres at about 35 km/h. The company said it could lie dormant on the surface in “standby mode” for up to 48 hours before a strike.

Fedirko told defence experts at Jane’s Defence Weekly earlier this month that companies were developing a new jet-powered interceptor drone that could be used in large numbers to destroy the fastest Russian drones. Some of the greatest damage to civilian targets in Ukraine has been done by Geran drones based on the Shahed design from Iran.

Interceptor race

The race to build interceptor drones is vital in Ukraine, as it cannot rely on supplies from the United States to ward off Russian missile attacks. The war with Iran has exacerbated the shortage of American missiles, such as the Patriot systems.

Rather than using expensive US missile systems that cost millions of dollars to bring down Russian drones that cost $US50,000 or less, Ukraine may be able to use large numbers of cheap interceptor drones to defend its skies.

Already, defence analysts see a shift in the war from Ukraine’s ability to innovate more quickly than Russia.

“Ukrainian forces are achieving temporary tactical drone overmatch in some frontline sectors, which is slowing Russian offensive operations by degrading the effectiveness of Russian shaping operations,” said George Barros and Kateryna Stepanenko of the Institute for the Study of War.

“The tactical drone overmatch is also likely enabling Ukrainian forces to pursue more strikes against Russian targets.”

The leader of the Ukrainian armed forces, General Oleksandr Syrskyi, told The Times of London that his forces had an edge over Russia in the use of first-person-view (FPV) drones, which allow remote operators to see the target through the drone’s camera.

“It is absolutely essential to use cutting-edge technology — it gives you an advantage,” he told the newspaper in a rare interview. He said his forces were flying nearly twice as many FPV missions per day as the Russians.

Syrskyi also acknowledged a grim but essential metric that guides his military strategy and might achieve the political goal of forcing Russian President Vladimir Putin to resort to conscription to continue the war.

“Our main objective is to ensure that the enemy loses more than 1000 personnel killed or wounded every day, losses so great that they exceed the enemy’s ability to replenish its forces,” Syrskyi told The Times.

Ukraine’s Defence has said it wants to see 7 million drones produced this year, up from 2.2 million in 2024.

Fedirko, however, cautioned that it was too early to be certain that Ukraine would eclipse Russia in drone production. One constraint, he said, was the supply of components from source countries such as China.

“Two years ago, our government established some projects which helped our manufacturers to decrease this dependency,” he said.

“And right now, in our market, we have more than 100 companies that produce the components.

“But, as well, we are struggling with the supply chains. The main problem is the capacity.”

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