Nearly a year after Ukraine resumed controlled arms exports, the country’s defence industry has secured up to ten small export contracts, while not a single permit has yet been issued under the new simplified mechanism set out in Cabinet of Ministers Resolution No. 875. This was stated by Ihor Fedirko, Executive Director of the Ukrainian Council of Gunsmiths.
He recalled that in October last year the government announced the resumption of controlled exports of Ukrainian weaponry. In February 2026, the first permits issued were described as the effective start of the new mechanism. At the same time, on 1 July the Cabinet of Ministers adopted Resolution No. 875, which was meant to introduce a special simplified procedure for exporting defence products during martial law.
However, Fedirko says that over the entire period the private defence sector has concluded only up to ten small export contracts. In addition, he says, only one joint venture of a Ukrainian manufacturer abroad is actually operating.
Meanwhile, under the mechanism provided for by Resolution No. 875, not a single permit has been issued to date.
Fedirko believes the problem lies not so much in the very idea of simplifying exports as in the conditions under which the mechanism operates. In his view, some provisions of the resolution make exporting Ukrainian weapons economically unviable or create excessive risks for manufacturers.
“Overall, it contains the right decisions: up to 30 days to review an application, a simplified procedure for partner countries, the ability to transfer technologies. But its key conditions make exports either unprofitable or too risky for the manufacturer,” the representative of the Ukrainian Council of Gunsmiths noted.
According to Fedirko, one reason the document is flawed was insufficient dialogue between the state and the defence industry during its preparation. He says that over the whole period he was invited to only one meeting on the resolution — back in the spring. After that, representatives of industry associations gathered manufacturers’ proposals and passed them to the state, but in the final version of the document the market’s key comments, he says, were not taken into account.
Fedirko highlights five main problems with the resolution.
The first is the size of the export fee and the lack of differentiated rates.
The resolution sets a fee of 20% of the value of finished products and technologies and 30% of the value of components. The money must be paid even before the application for a permit is considered, and, Fedirko says, there is no clear mechanism for returning it in the event of a refusal.
In his view, a single rate for different categories of products fails to reflect the realities of the international market. In particular, for conventional weaponry such as armoured vehicles, an additional 20% can make Ukrainian products uncompetitive on price.
Fedirko also singles out dual-use products as a separate problem. Ukrainian companies produce, among other things, engines and thermal imaging cameras that can be used both in military systems, including drones, and in civilian fields — for example, to monitor electrical and heat networks. At the same time, a 30% rate applies to such components regardless of the product’s end use and the specific market. As a result, the manufacturer is forced either to pass the additional costs on to the foreign customer, losing competitiveness, or to pay them out of its own margin.
The Ukrainian Council of Gunsmiths proposes lowering the rates and introducing a differentiated model that would take into account the type of product, its purpose and the level of competition on the international market.
The second problem is the requirement to pay the fee before a decision is made on issuing a permit.
According to Fedirko, a document confirming full payment of the relevant fee must be submitted together with the application. In this way, the manufacturer takes on a financial obligation before the state determines whether it may carry out the export in question.
In the event of a refusal, the company, in the industry representative’s view, risks losing not only the foreign contract but also the money already paid. That is why the Ukrainian Council of Gunsmiths proposes providing for a refund of the fee in the event of a refusal, or introducing a staged payment model: paying part of the fee when submitting the application and the remainder after a positive decision.
The third problem concerns the minimum contract value.
The special procedure set out in Resolution No. 875 applies to exports worth at least UAH 15 million, with the exception of components and parts. Fedirko stresses that this means small batches of products that foreign customers may purchase for initial trials and testing do not fall under the special mechanism.
“But a foreign customer very rarely starts cooperation straight away with a large series. First, they order a few units for trials, evaluation and testing. Such contracts often do not reach UAH 15 million and therefore fall outside the special procedure,” he explained.
The Ukrainian Council of Gunsmiths proposes abolishing this threshold for pilot, demonstration and test batches of defence products.
The fourth problem is the possibility of blocking exports because a state customer intends to purchase the relevant product.
Under the resolution, an intention by the Ministry of Defence or another state customer to procure the item may serve as grounds for refusing to issue an export permit or for suspending an already issued permit for up to 30 days.
The manufacturer may provide written guarantees to supply the product for defence needs in the volumes and within the timeframes specified by the state customer. In that case, the state customer’s intention itself should not be grounds for refusal. If the permit has not yet been issued, the state customer must, within 30 days, take steps to conclude a contract. If no contract is concluded, the manufacturer may resubmit the documents, and the previous intention can no longer be used as grounds for a new refusal.
However, Fedirko notes that a 30-day wait may be unacceptable for a foreign buyer. During that time, the manufacturer risks losing the contract, while the fee for processing the permit has already been paid.
Fedirko stresses that the priority of supplying the Ukrainian armed forces is not in question. At the same time, in his view, if the state effectively blocks exports of a particular product because it needs it itself, it must be prepared to buy that product.
The Council of Gunsmiths proposes that a state customer’s intention should include specific procurement volumes, deadlines, confirmed funding and an obligation to conclude the relevant contract. Without such parameters, market representatives believe, the intention alone should not be sufficient grounds to refuse an export.
The fifth problem concerns the export of services.
The resolution allows instruction only to the minimal extent necessary to use the exported products. At the same time, it does not create a separate, fully fledged mechanism for exporting services.
According to Fedirko, service and technical maintenance, operator training, the work of accredited UAV schools, as well as the services of certified humanitarian demining operators remain outside the special procedure.
He notes that Ukraine has accumulated substantial practical experience in these areas, and international demand for Ukrainian expertise is growing. At the same time, opportunities to export the relevant services remain limited. In this regard, Fedirko proposes extending the special procedure to cover the standalone export of certified and accredited services as well.
Fedirko also noted a change in approach on the part of the Ministry of Defence. According to him, the ministry has begun engaging more actively with industry associations and holding consultations with manufacturers.
He added that industry representatives have been promised that changes to the export mechanism will be presented as early as the beginning of September. Fedirko expressed hope that this time manufacturers’ proposals will not only be collected but also taken into account when the document is revised.