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Canada’s Defence Industrial Strategy: Opportunities for Businesses and Showcasing Canada’s Talents

By: Paige Backman

Introduction

A rapidly shifting geopolitical landscape marked by, as Mark Carney argues, the erosion of the international rules‑based order and intensifying technological competition has driven a fundamental reassessment of national security and defence policy in Canada. The federal government recently released Canada’s Defence Industrial Strategy (“DIS”), a potentially transformative economic framework designed to strengthen national sovereignty and catalyze industrial growth.

The proposed strategy seeks to move away from decades of fragmented procurement practices and overreliance on foreign suppliers. Through the DIS, the government aims not only to rearm the Canadian Armed Forces (“CAF”), but also to build a resilient domestic defence industrial base and supporting intellectual ecosystem that is export-ready. The targeted areas of the DIS include sectors where Canada’s growth curve may be significant, while also bolstering and showcasing areas where Canada is a global leader. 

While positioned as a defence strategy, the opportunities for Canadian businesses, both at the core of this strategy and through multiple supply chain channels, are significant. At its core, the DIS is a jobs and supply‑chain security strategy underpinned by more than $500 billion in projected defence spending and investment opportunities over the next decade.

Shift Toward Domestic Priority

The DIS supports a policy direction governed by principles of building and investing in Canada and partnering with stable, like-minded allies. Key principles include the following:

  1. Build in Canada
    When critical capabilities can be manufactured domestically (e.g., shipbuilding, aerospace, cyber, land systems, space and digital technologies), Canadian firms will receive priority as a matter of policy.

  2. Partner With Allies
    Where joint development with trusted partners offers strategic or economic advantages, Canada will pursue collaborative procurement models.

  3. Buy From Allies Only When Necessary
    When neither domestic production nor partnership is feasible, foreign acquisitions will include mandatory economic reinvestment obligations to ensure Canadian companies and workers benefit.

Reduction of Red Tape and Increased Efficiencies

While the guiding principles and goals provide good platitudes for politicians, bureaucracy and layers of red tape have traditionally stalled such principles as mere sound bites. The DIS aims to address this by streamlining procurement and decision-making.

The Defence Investment Agency: A Central Procurement Authority

The Defence Investment Agency (“DIA”) will serve as the single point of contact for defence investment and procurement. When established, the idea is that the DIA will:

  • streamline procurement processes;
  • cut regulatory barriers and administrative delays;
  • co-ordinate joint procurement with allies;
  • prioritize Canadian suppliers, including small and medium-sized enterprises (“SMEs”); and
  • modernize and accelerate security clearances.

Meaningful Economic and Industry Opportunities

The DIS offers material economic support to backstop these goals. The economic support includes $180 billion in defence procurement opportunities and $290 billion in related capital investment. These commitments and the assumed downstream economic benefits target a material expansion of domestic production capacity in aerospace, advanced manufacturing, cyber, AI, quantum, space and dual‑use technologies.

Canada is already considered a global leader in many of these areas, including cyber, AI and quantum technologies, supported by world-class research, talent development and technological advancement. This further positions Canada as a valued partner to its allies.

Innovation Funding to Support Canadian Businesses

The DIS includes significant measures aimed at supply chain development and resilience supporting these critical areas, which, if implemented, would theoretically create numerous additional opportunities for Canadian businesses. The strategy introduces a suite of funding and innovation supports designed to give SMEs – which form the heart and backbone of Canada’s economy – capital and infrastructure support, should they desire to scale up in these areas. The potential funding opportunities for SMEs include the following:

Conclusion: Potential for Transformational Economic Framework and Opportunities for Canadian Businesses

Canada’s DIS and associated legislation are designed to provide targeted material investment prioritizing Canadian businesses, whether they are large multinationals or SMEs, not only in traditional defence sector assets but in emerging technologies used in these sectors, as well as the human resources supporting them.

For Canadian businesses, the combination of proposed investments, stable procurement demand, export opportunities, heightened intellectual property protections and an expedited procurement and decision-making process represents a potential seismic shift.

Canada has often been a country of quiet excellence. We are widely considered the most educated country in the world and a leader in emerging technologies. Canada has needed more ways to unleash our knowledge and talent on a global scale. Through the proposed investments and strategic initiatives set out in the DIS, Canadian businesses are well-positioned to assert economic leadership and play a key role in shaping the emerging global defence and economic landscape.

The National Security Group at Aird & Berlis LLP is available to advise businesses on opportunities arising from Canada’s Defence Industrial Strategy, including procurement processes, regulatory requirements, security considerations and strategic partnerships in the defence and dual-use technology sectors. For more information, please reach out to the author or a member of the group.

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