Security, Sovereignty, and Prosperity: Unpacking Canada’s First Defence Industrial Strategy

For generations, Canada’s approach to national security relied heavily on favourable geography and the protective umbrella of its closest allies. However, the rapid erosion of the rules-based international order, intensifying geopolitical friction, and an unprovoked trade war disrupting traditional supply chains have forced a massive shift in Ottawa.

On February 17, 2026, Prime Minister Mark Carney launched Security, Sovereignty and Prosperity: Canada’s First Defence Industrial Strategy (DIS). Representing a seismic pivot in national policy, this blueprint addresses a critical reality: national security and economic resilience are fundamentally intertwined. The strategy acts as an industrial roadmap to systematically dismantle Canada’s historical over-reliance on foreign suppliers—most notably the United States, which has traditionally received roughly 70% of Canada’s weapons budget—and replace it with a robust, high-tech, domestic defence industrial base.

The foundational engine of the strategy is an ambitious investment framework totalling over half a trillion dollars over the next decade. This includes $180 billion earmarked directly for defence procurement and $290 billion dedicated to defence-related capital investments and multi-use infrastructure, such as northern ports, runways, and secure communications arrays. By 2035, the federal government anticipates these investments will yield an unprecedented $125 billion downstream economic benefit.

To execute this historical build-up without succumbing to the procurement delays that have plagued Canadian defence projects for decades, the government established the Defence Investment Agency (DIA). Acting as a central coordinator, the DIA operates under a simplified, strict procurement hierarchy: Build, Partner, Buy.

Wherever Canada possesses homegrown strength, domestic manufacturing will be prioritized as a matter of mandatory policy. The “Buy Canadian” directive acts as the new North Star for defence acquisitions, intentionally fostering national champions and securing domestic control over critical intellectual property (IP).

When building entirely within Canada is unfeasible, the government will engage in co-development with trusted allies. These arrangements will be heavily structured to ensure technology transfers, supply chain integration, and that public dollars flow back into  Canada’s economy.

When Canada must purchase off-the-shelf equipment from international allies, these acquisitions will carry rigid conditions. Foreign vendors must reinvest significantly into  Canada’s economy to guarantee that the Canadian Armed Forces (CAF) retains sovereign control over the long-term operation, maintenance, and sustainment of those assets.

The DIS breaks away from traditional piecemeal military planning, organizing its objectives into five distinct, actionable pillars:

Historically, Canada’s defence firms operated in a vacuum, often blind to the long-term needs of the military until formal tenders were issued. The DIS changes this by mandating clear, long-term demand signals from the CAF. Central to this pillar is the creation of a permanent Defence Advisory Forum, led by the DIA, to foster transparent communication. Furthermore, the government has pledged to rapidly accelerate security clearances and facility accreditations, clearing a persistent bureaucratic bottleneck that historically prevented smaller, innovative firms from entering the defence space.

This pillar mandates operational readiness targets meant to breathe life back into aging military fleets. By leveraging the Build-Partner-Buy framework, the government aims to dramatically shift contract distribution, requiring that a baseline of 70% of all defence acquisitions be awarded directly to Canadian firms.

Canada’s defence sector is a highly research-intensive domain, spending $440 million on R&D annually—a rate three times higher than the Canadian manufacturing average. The DIS amplifies this strength by boosting government defence R&D investments by 85%.

A cornerstone of this effort is the creation of BOREALIS (the Bureau of Research, Engineering and Advanced Leadership in Innovation and Science). BOREALIS functions as a high-velocity incubator, uniting military personnel, academic researchers, and industrial engineers in secure, shared laboratories to fast-track cutting-edge technologies. Additionally, the government will deploy $244 million to small and medium-sized businesses through a specialized Defence Industry Assist stream via the National Research Council’s Industrial Research Assistance Program (NRC-IRAP).

Global vulnerabilities have exposed the danger of single points of failure in defence manufacturing. This pillar targets the domestic hoarding, refining, and manufacturing of raw inputs, critical minerals, microelectronics, and electronic components to insulate Canada’s production lines from geopolitical blackmail or foreign export restrictions.

While the DIS emphasizes strategic autonomy, it explicitly establishes that autonomy does not mean isolation. This pillar focuses on strengthening interoperability with NATO and NORAD allies, positioning Canada as a self-sufficient “partner of choice” rather than a dependent consumer.

To guide funding, the strategy identifies 10 specialized technological sectors where Canada must maintain operational superiority or robust domestic manufacturing capacity.

| Focus Area | Core Technologies and Mandates |

| 1. Aerospace | Domestic production of aerospace platforms, advanced avionics, and specialized aircraft communications systems. |

| 2. Ammunition | Establishing sovereign stockpiles and manufacturing capabilities for common ammunition, battle-decisive munitions, small arms, and missiles. |

| 3. Digital Systems | Expanding secure cloud infrastructure, artificial intelligence integration, quantum computing, and high-assurance communications equipment. |

| 4. In-Service Support | Ensuring naval, land, and air fleets are maintained domestically to guarantee immediate operational availability. |

| 5. Personnel Protection | Focusing heavily on medical countermeasures, biological defence, and advanced field equipment for personnel safety. |

| 6. Sensors | Investing in advanced marine sensors, electronic warfare units, and next-generation quantum sensors. |

| 7. Space | Bolstering space-based intelligence, surveillance, reconnaissance (ISR), space domain awareness, and satellite communications. |

| 8. Specialized Manufacturing | Expanding shipyard and automotive lines to produce land vehicles, surface ships, icebreakers, and complex marine systems. |

| 9. Training & Simulation | Scaling Canada’s global edge in high-fidelity synthetic environments and virtual training systems across naval, land, and air domains. |

| 10. Uncrewed Systems | Funding an NRC-hosted drone innovation hub dedicated to uncrewed collaborative aerial, surface, and underwater platforms. |

The success of the strategy will be measured against strict, quantitative key performance indicators (KPIs) over the next ten years.

 Fleet Serviceability: Raising operational availability to a minimum of 75% for maritime fleets, 80% for land fleets, and 85% for aerospace fleets to satisfy rigorous training and mission requirements.

 Domestic Market Expansion: Increasing total Canadian defence industry revenues by more than 240%, creating over 125,000 highly skilled, high-paying STEM and manufacturing jobs across the country.

 Procurement Shift: Successfully migrating the domestic share of defence contracts to 70%, effectively reversing the reliance on foreign military purchases.

While domestic defence industry advocates have widely lauded the policy as an overdue corrective, defence analysts maintain that implementation remains the strategy’s steepest hurdle. Reconciling the DIA’s dual mandate—swiftly delivering lethal capabilities to the military while simultaneously squeezing out maximum domestic economic benefits—requires a delicate balancing act. Historically, aggressive domestic procurement mandates (“Canadian content requirements”) have inadvertently prolonged delivery timelines and inflated costs.

Furthermore, integrating these strict domestic preferences while attempting to remain deeply synchronized with highly integrated, US-dominated NATO supply chains will test Ottawa’s diplomatic and industrial agility.

The Defence Industrial Strategy marks the end of an era of defence complacency in Canada. By aligning the country’s economic machinery directly with its sovereign security requirements, the federal government is laying down a template for modern statecraft in a fractured century. If executed successfully, the DIS will not only safeguard Canada’s border and the Arctic frontier. Still, it will also transform the domestic defence sector into a powerful engine of high-tech economic prosperity.