Canada’s New Strategy Looks To Rebuild, Rearm and Reduce Reliance

Published earlier this year, Canada’s Defence Industrial Strategy is the first of its kind for the member of the Commonwealth of Nations. Aiming to advance its military, the government of Canada is investing in its technological landscape to reduce reliance on allies and partners.

On February 17, Canadian Prime Minister (PM) Mark Carney launched the nation’s strategic framework. “The world is changing rapidly,” a PM news release states. “The international rules-based order is fading, and technological change is expanding the field of conflict.” In response, the Canadian government is focused on “rebuilding, rearming and reinvesting in the Canadian Armed Forces (CAF).” According to the report, Canada is set to hit its 2% NATO spending target by this fiscal year. Additionally, recruitment is on the increase across the CAF.

Largely led by the newly established Defence Investment Agency, or the DIA, the Defence Industrial Strategy focuses on five key pillars: renew the CAF’s relationship with industry partners; prioritize domestic production; invest in innovation; secure supply chains; and work with domestic partners.

Notably, the government of Canada pledged more than $81 billion in its 2025 budget, with more than $6.5 billion allocated to the strategy.

“… It’s definitely a signal from the Canadian government that it’s taking the defense of Canada and our participation across alliances seriously and recognizing where rectification and improvements are necessary, and where their participation is actually quite beneficial to the industry,” said Jason Kenny, director of business development at IMP Aerospace & Defense. Kenny spoke with SIGNAL Media during the Sea Air Space 2026 conference in Maryland.

Founded more than 50 years ago, IMP Aerospace & Defense is a Nova Scotia-based company specializing in repairs of aerospace and aircraft components.

Along with its industry partners, IMP has been advocating for such an effort and therefore applauds the recent advancements, Kenny stated.

“Some of the aspects of it that I quite appreciate are the areas that speak about having our government proactively promote our defense industry internationally, and providing that sort of proactive assistance, while we’ve benefited from much assistance from our government in the past. To have it coherent and directed the way that’s suggested inside the strategy is actually quite a positive development from our perspective,” Kenny said.

The 58-page strategy outlines estimated targets by 2035, including $180 billion in procurement, $290 billion in defense infrastructure and $125 billion in downstream economic activity.

Although Canada’s procurement system is diffuse across different bodies, the strategy aims to consolidate the decision-making process under one body of the DIA, said Matthew da Mota, a senior policy associate at the Canadian Shield Institute.

“In theory, I think [that] will allow for quick response, better coordination to be able to build these integrated digital systems,” he told SIGNAL Media in an interview.

The strategy showcases a commitment by the Canadian government to expand its military and build better capabilities, da Mota said. Additionally, it aims to channel defense spending into economic opportunities and investment in small- to medium-sized businesses.

“It’s obviously about modernizing and building up the Canadian military’s capabilities but also trying to translate that into a defense industrial base that serves civilian needs,” he stated.

The strategy does appear to aim for a dual-use environment, which not only caters to Canadian defense ambitions but also supplies necessary means for other militaries, da Mota explained. There is, however, a lack of clarity in that field, he added.

“There’s a continued discussion ... in the defense industrial strategy [about] continuing to meet Canadian values, so does that mean we won’t be pushing to really supply a ton of munitions, but we’ll continue to supply or maybe ramp up supplying armored vehicles?” he posited.

One of the challenge areas within the Bureau of Research, Engineering and Advanced Leadership in Innovation and Science, commonly referred to as BOREALIS, is drones, da Mota offered. “Will there be nonlethal drones or just sort of drone technologies? Those questions are still uncertain. How will it advance those capabilities and what areas will we push into?”

According to the strategy, the budget for BOREALIS exceeds $68 million over three years to invest in cutting-edge technology, including artificial intelligence (AI), quantum and cybersecurity. BOREALIS is also set to establish Defence Innovation Hubs where academic researchers will collaborate with government and industry in a secure environment.

Another challenge da Mota pointed to within the strategy was confusion about the definition of what qualifies as a Canadian company.

One such example was found in an instance when the Canadian defense industrial base committed $300 million to General Dynamics Canada to build a new facility for nitrocellulose in Canada. While GD Canada is a Canadian-registered subsidiary, it is still majority owned and controlled by a U.S.-based company.

The investment was not in the spirit of the defense industrial strategy, da Mota said. While it makes sense to continue funding existing expertise and infrastructure for the good of the nation—such as expanding GD Canada’s capacity to build munition shells for the CAF—investment in a new capability should be targeted toward a Canadian-based company.

“It’s not to say we shouldn’t be partnering with any American companies ... but there’s sort of a third tier where we’re building this completely new to Canada capacity and the choice to give that money to an American-Canadian subsidiary of a foreign company ... it’s not really building the Canadian owned and controlled capacity that they’re saying they’re going to build,” da Mota explained.

“There is a brand-new Canadian company that was just started who partnered with a French company that has expertise on nitrocellulose factories,” he continued. “They’re also building a huge factory. It’s private equity-supported. It’s not supported by the government as of right now.”

Although capabilities that require specialized skill sets should be produced by companies with the highest expertise, it is a missed opportunity not to invest in domestic companies benefiting Canada’s resource-heavy economy when possible.

“This is the kind of stuff where we’ve historically invested a lot and [the government doesn’t] demand a lot in return, and I think it’s just bad policy,” da Mota said. “This one showed that the defense industrial strategy does not inherently fix those problems. They really have to be thinking about strategically making sure that these things are owned and controlled in Canada, that they’re capturing any IP that flows out of them and so on.”

The government of Canada, da Mota suggests, should be stricter in its definition of a Canadian company, as the strategy allocates 70% of its spending for Canadian organizations.

For the most part, the majority of the strategy was no surprise to the Canadian public. Certain elements, such as intellectual property retention, were not specific enough, da Mota noted.

Additionally, while the DIA is leading the charge in procurement for the strategy, other government agencies still play a role in decision-making, which could lead to challenges due to competing interests. “If [The Indigenous Skills and Employment Training program] wants to drive economic value, and [The Department of National Defense] really just needs a certain capability, there’s not clarity to people on the outside what will decide which one will have more authority,” he said. “Usually most governments tend to prioritize the national security need if there’s a specific capability, but the more broad structural questions of how we’re building up the base ... it’s unclear who makes those final decisions between those different bodies.”

One final criticism da Mota shared is toward international partnerships. To some, there is a sense of distancing from close relationships with the United States in terms of defense procurement. Others call for deepening of alliances with the country and fellow NATO and Five Eyes member states.