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Published on January 12, 2026
• 3 min read
The new federal strategy aimed at strengthening Canada’s defence sector will provide development opportunities for many businesses.
Canada is embarking on a major transformation of its defence industry. As part of the federal budget announced in November 2025, a historically high envelope of $81.8 billion over five years was earmarked for modernizing the Canadian Armed Forces and thereby honouring the country’s international commitments.
The defence industry extends beyond both weapons and bolstering military capacity. Investment in the sector will lead to a strategic commercial transformation that will build momentum within companies involved in every stage of production. This approach will offer diversification and development opportunities while also impacting ongoing operations. For example, various sectors such as food supply could benefit from building maintenance needs.
What do we mean by “the defence industry”?
The defence industry refers to all businesses, technologies and infrastructure that contribute to national security. This includes:
- the production and maintenance of military equipment;
- research and development in cutting-edge fields;
- strategic services such as logistics and cybersecurity.
The sector is supported by complex supply chains that mobilize SMEs and large providers of critical components.
Defence is a key economic engine that creates thousands of jobs for skilled workers and boosts related sectors such as:
- aerospace;
- manufacturing;
- naval construction.
This industry must comply with strict standards and robust certification procedures. It also serves to boost technological innovation.
Which sectors will benefit from these business opportunities?
The financial commitments made by both governments will stimulate local production, foster innovation and support the creation of jobs for skilled workers which will have long-lasting effects on the country’s industrial competitiveness.
The following sectors in particular will benefit from these initiatives.
Construction
Modernization of military bases and development of shipyard projects.
Manufacturing
Making Canadian armoured vehicles and ammunition mobilizes the skills of SMEs specialized in weapons, for example.
Aerospace
Designing surveillance aircraft, drones and detection systems provides opportunities for suppliers of electronic systems and maintenance support for such devices.
Naval
An increase in maritime capacity through submarines and supply vessels as part of the National Shipbuilding Strategy.
Advanced optical and photonic systems and materials
Developing technology for sensors, secure communication and military equipment involves innovative businesses in the optical and applied AI sectors.
These projects will also encourage the following emerging technologies:
- Automating production chains;
- Bolstering cybersecurity;
- Integrating environmental, social and governance (ESG) criteria;
- Training a highly qualified workforce.
In order to seize the opportunities created by this shift, you must take action now.
- Focus on innovation;
- Build strategic partnerships;
- Invest in skills.
What are the Government of Canada’s key investments?
The federal government would like to achieve its objective of spending 2% of the country’s GDP (a NATO guideline) through investments in defence. This plan provides for a progressive increase in defence spending to hit a target of 5% of GDP in 2035. This involves allocating 3.5% of GDP for core military spending and 1.5% for security initiatives at all government levels.
This represents:
- $20.4B for employee recruitment and retention;
- $19B for infrastructure and ammunition;
- $10.9B for cybersecurity and digital upgrades;
- $17.9B to expand military capabilities;
- $6.6B to launch the Defence Industrial Strategy;
- $6.2B for international partnerships and aid;
- $805M for additional initiatives.
This is the largest investment in national defence in several decades.
What role will Québec play in this national defence industry?
The economic benefits related to increased military investments will primarily involve:
- aerospace (aircraft, drones, satellites, etc.);
- shipyards;
- land transportation;
- information technology;
- critical minerals;
- security.
Funds spent by the federal government could directly benefit several Québec businesses and particularly those involved in modernizing naval, air and land fleets.
SMEs that specialize in optical systems, simulators, drones, surveillance aircraft and electronic components will be among the key players.
The number of Québec companies that are interested in the defence sector has more than doubled over the past year. This shows that businesses are increasingly ready to take advantage of opportunities related to modernizing Canadian military capabilities.
In addition, as part of its industrial and security strategy, the Québec government can now financially support the production and distribution of weapons (with the exception of controversial weapons).
The most recent available data indicates that Québec has just over 8,500 jobs in the defence industry which amounts to 23.7% of all defence roles in Canada. This is the second-highest provincial rate. In 2022, Ontario had a total of 12,800 defence roles which represented 35.7% of the sector’s jobs across Canada.
To help you set realistic goals and develop the best strategy, make sure you have the support of a select team. They will guide you toward the best decisions based on your values and needs as an organization.