At least 208 military products are currently being produced in Latvia, while the defense ministry has still signed major contracts with the Latvian defense industry with a projected long-term impact on the local industry amounting to 285 million euros, the Ministry of Defense reported to LETA.
Analyzing the growth dynamics of the defense industry, the ministry notes that in recent years it has strengthened its role as one of the fastest-growing and most promising sectors of the economy, driven by the increasing demand for security solutions, technological advancements, and targeted government support.
The industry is not only expanding its production and service capacities but is also increasingly participating in international cooperation projects and innovation development.
Currently, compared to 2024, there is a positive growth trend in the defense industry across several indicators.
In Latvia, there are at least 240 defense industry enterprises producing dual-use or military products. The number of new licenses issued has increased by 37.5% — 22 enterprises received new licenses.
The leading categories of products and services include engineering services, information and communication technology services, as well as drones and autonomous systems.
As a result of the Ministry of Defense's innovation grant program, the number of enterprises has increased by 22.2%, reaching 11 contracts worth a total of 2.4 million euros.
Contracts have also been signed for the development of major capabilities with a projected long-term impact on the local industry amounting to 285 million euros, including orders and production as well as the transfer of knowledge and technologies related to manufacturing.
Currently, at least 208 military products and 106 dual-use products are being produced in Latvia, which are used for both military and civilian purposes. The industry is dominated by engineering services, which make up the bulk of the offerings, followed by information and communication technology solutions, logistics, drones, and autonomous systems. Significant roles are also played by road transport and transport services, as well as ammunition production.
The main areas of activity of enterprises indicate a strong technological and industrial base. Most companies operate in the engineering sector, followed by the production of unmanned aerial vehicles and related technologies, information and communication technologies, and metalworking.
The development of the defense industry has been significantly supported by government support mechanisms. Since 2025, the Ministry of Defense has issued 15 conclusions on military production projects, in which companies plan to invest over 139 million euros, and 118 conclusions on dual-use projects, allowing them to claim government support totaling over 74 million euros.
These conclusions have enabled enterprises to attract funding and gain advantages in various support programs, including the Central Finance and Contracting Agency (CFLA), Altum, and the Latvian Investment and Development Agency (LIAA).
At the same time, the Ministry of Defense's military innovation grant program makes a significant contribution. In 2025 alone, defense industry enterprises were awarded 11 grants totaling over 2.3 million euros, with a particular focus on developing military infrastructure, including bunkers, trench systems, and defensive structures. Overall, since 2018, 51 contracts have been signed for funding amounting to 5.9 million euros.
The volume of orders from the Ministry of Defense for research and development projects aimed at enhancing the industry's participation in the development of armed forces capabilities and facilitating the commercialization of new technologies is increasing. In 2025, the ministry signed four research and development projects for creating counter-drone systems worth 6.3 million euros, and by 2028, annual funding for such projects is planned at up to 4.3 million euros.
At the international level, the Latvian defense industry actively participates in projects of the European Defense Fund. From 2019 to 2023, it was involved in 30 fund projects with total funding of 26 million euros.
The Latvian industry is also demonstrating results in the international "Drone Coalition," where, following joint procurements, three Latvian companies received orders totaling 41 million euros by the end of 2023 for the production of 17,000 drones for the needs of Ukraine's unmanned systems forces.
Additionally, eight Latvian drone manufacturers received orders from the Ministry of Defense for the production of unmanned systems worth 20 million euros as part of bilateral cooperation between Latvia and Ukraine.
The participation of local companies in international cooperation is also growing. By April 2026, nine localization agreements involving 31 Latvian enterprises have been signed, strengthening the local industry and its integration into global supply chains. Over the past three years, the volume of work performed by the local industry under contracts for developing major capabilities has tripled, reaching 70 million euros.
The number of licensed enterprises is also increasing. If in 2012 there were only five companies in Latvia with licenses for military product activities, by 2026 their number reached 123. Licenses were most frequently issued in the fields of unmanned aerial vehicles, electronic devices, and visualization technologies.
