Ukraine now builds far more weapons than it can afford to buy. A year ago, it promised to sell the surplus abroad and turn the proceeds back into its own army. However, 12 months later, that promise has barely materialized: a state fee of up to 30% is pricing Ukrainian arms out of foreign markets, and no one can say how much the army has actually gained, said Ihor Fedirko, executive director of the Ukrainian Council of Armorers.

President Volodymyr Zelenskyy announced the resumption of controlled weapons exports in October 2025, resting it on four promises: 1) sell what Ukraine makes beyond its own needs, 2) channel part of the proceeds into a special fund for the army, 3) open export offices in Europe and the US, and 4) establish joint ventures abroad.

The surplus is real: Ukraine's defense output is projected to reach $55 billion in 2026, far beyond what the state can finance. A year on, Fedirko checked each promise in turn.

1) Export of surpluses: rules that strangle businesses

On 1 July 2026, the government approved rules for controlled arms exports. They shortened the maximum application review period from 90 to 30 days, but also introduced an export fee: 20% for finished products and technologies, and 30% for components. For finished products exported under the special procedure, the contract value must be at least $334,000.

In September, the Ukrainian Council of Armorers, together with other associations, proposed a zero rate, no advance collection of the fee, refunds for deals that fall through, and simplified test shipments. The industry was promised that its amendments would be taken into account and that the resolution would be rewritten.

Even in early October, however, the rules still needed work. According to Fedirko, the new mechanism has effectively not started working. Whether it can bring in additional funds for defense depends on how acceptable the export terms are to manufacturers.

Fedirko says, though, that judging by current decisions, the state intends to keep the export fee.

“The industry is ready to discuss its contribution to defense financing. But the rate must be economically justified,” he says.

2) Procurement for the Ukrainian military: balance is only being established

He adds that the Ukrainian Council of Armorers intends to push for a rate significantly lower than 20%, one that would let companies fulfill contracts and invest in production.

With such high rates, Fedirko says, the competitiveness of Ukrainian weapons on foreign markets is in question, as is the ability to send even small test batches to potential buyers.

“The fundamental requirement is post-payment: after the contract has actually been fulfilled and the manufacturer has been paid. A company should not pay the state in advance a share of income it has not yet received,” he says.

He added that, given all this, the real export figures remain unclear, as does how much exports have actually brought the military.

“The military and manufacturers must feel the benefit of exports. I sincerely hope that next year will bring much better results,” he says.

In addition, on 12 October, the Ukrainian Parliament passed bill No. 15400 in the first reading. It provides for crediting the export fee to a special fund directed to the Ministry of Defense: 50% for the procurement, modernization, and repair of weapons and equipment, and 50% for the pay of Armed Forces personnel.

The bill has not yet been adopted, but Fedirko says he expects “final adoption and launch of the mechanism.”

3) Export offices: offices in Germany and Denmark

On 3 November, the Ukrainian government named the first cities for export offices: Berlin and Copenhagen. On 15 December, it again spoke of preparing an office in Berlin. In reality, Fedirko says he does not know the office’s status, and it likewise remains unclear how companies can apply to it and how many contracts it has helped close.

4) Joint ventures abroad: There are concrete results in this area

According to Fedirko, eight joint ventures have been created, five of which are already supplying products to Ukraine. He stresses that this is the result of work by Ukrainian companies, foreign partners and the state, and that it deserves recognition.

As early as February 2026, the authorities spoke of plans to create ten joint ventures in Europe within a year. At the same time, they announced Quantum Frontline Industries in Germany, with a planned annual capacity of 10,000 drones for Kyiv.

Beyond the number of ventures and deliveries, however, it is important to understand how other manufacturers can join the Build with Ukraine program.

“Who accepts applications, by what criteria are decisions made, and what support does a company receive?” Fedirko asks.

In other words, joint ventures are already delivering results, but the rules of participation and the state support mechanism must be clear to companies that want to develop production abroad.

In a government office, researchers of drones and electronic warfare gather around a small metal device recovered from a Russian Geran drone. Its purpose —  to measure the Earth’s magnetic field for navigation.

"This is the most recent component we found, about a week or two

Ukraine’s military intelligence (HUR) published a 3D model and parts list of Russia’s new Filin cruise missile on 22 October. The breakdown names the Russian companies behind the missile and the foreign makers of its electronics.

HUR runs its War&Sanctions portal to trace such parts back to their makers. Its stated aim is to “deprive the aggressors of the ability to produce weapons for terror,” the portal says. Meanwhile, Russia is betting on cheap, fast cruise missiles, Serhii Beskrestnov, a freelance adviser to the president on technology, told Radio NV in mid-September. Naming the Banderol, Dan-T, Dan-M, and Gerbera-5, he warned they would soon outrun Ukraine’s jet-powered interceptors, so Ukraine needed its own cheap missiles to shoot them down.

Composite body, ground launch

JSC NPO Molniya, part of Russia’s Tactical Missiles Corporation, builds the Filin, HUR said. The agency called it part of a Russian defense-industry trend toward cheap jet-powered, ground-launched air-attack weapons. Russia began firing it at Ukraine in late summer 2026.

HUR’s data puts the carbon and fiberglass fuselage at 3.5 m, with a 3 m wingspan. Some parts are 3D-printed. Russia claims a top speed of 800 km/h. The range is 600–1,200 km, and the missile flies at ultra-low altitude or up to 6 km. Versions carry 50-kg or 100-kg warheads. A solid-fuel booster fires it from a ground launcher.

A firm tied to a Shahed-type drone

PLAZ LLC makes the onboard equipment, HUR said. The firm also helps produce the Garpiya, a version of Russia’s Shahed-type Geran-2 drone. Filin and Garpiya units share a similar layout and markings. Guidance combines a Chinese-made inertial navigation system with a 16-channel Kometa anti-jamming module from Russia’s VNIIR-Progress.

The electronics resemble those in other Russian missiles and drones but carry a larger share of Chinese parts. Of 81 components, 35 are American and 22 Chinese. The engine, however, is Russian: an R500 turbojet from Reynolds LLC. A similar engine earlier turned up in the S-71K Kover aviation cruise missile and S-71M Monokhrom, HUR said.

For comparison, Ukraine found more than 20 foreign components in a different cheap missile, the Banderol, in May 2025. They included 10 US microchips, and the Banderol flies on a Chinese jet engine.