Lithuania’s defence industry is ready to contribute to European security. The ongoing Russia’s war in Ukraine has prompted the continent to strengthen its defence capabilities and ramp up military production, and Lithuania is keeping pace. The country’s defence sector might be young, but it has already seen both major international investment and locally-born success stories. Bolstered by a robust state support framework and a mature tech ecosystem, it is posting a 14% annual growth rate. And experts say there is plenty more potential to explore.
“Our defence industry is rapidly evolving, demonstrating significant growth and innovation. With strong state support and a thriving tech ecosystem, Lithuania is well-positioned to enhance European security and meet the increasing demands of modern defence. The state is ready to contribute to this development, and the new law on the defence industry we adopted in May will help to boost these processes. The defence industry should be an integral part of our defence architecture”, Laurynas Kasčiūnas, Lithuania’s Minister of National Defence says.
Ready to welcome industry giants
The arrival of German defence giant Rheinmetall marked a new era for Lithuania’s defence industry. The company announced plans to build an artillery ammunition plant,expected to produce tens of thousands of rounds of ammunition per year. When finished, it will be the only 155mm ammunition plant in the Baltics.
“Increasing the production capacity of the defence industry is becoming a priority for Europe as a whole. The new plant will help to replenish defence stockpiles and secure the combat readiness of armed forces across the continent, as well as allow Europe to continue supporting Ukraine,” said Aušrinė Armonaitė, Minister of the Economy and Innovation.
Lithuania is also looking to turn the arrival of Rheinmetall into an ice-breaker for other manufacturers of defence production. To promote the development of large-scale defence production, the country’s lawmakers recently approved new legal provisions that simplify territorial planning, land procurement, and construction procedures, thus shortening the setup period from two years to six months.
Launching operations in as little as half a year is not the only benefit the potential defence investors can enjoy in Lithuania. Tax incentives for large-scale investment projects include a 0% corporate income tax for 20 years, while clear and fast export licensing allows for streamlined export procedures.
A fast-growing MilTech ecosystem
Rheinmetall and other defence manufacturers establishing operations in Lithuania will join a rapidly developing ecosystem of innovative companies. Between 2018 and 2023, the number of specialists employed in Lithuania’s defence industry grew by 14% annually on average, which is twice as fast as the national average in the same period.
This growing ecosystem is home to a number of businesses that leverage Lithuania’s industrial strengths in telecommunications, lasers, sensors and other high-tech fields to produce cutting-edge military products. One of such companies is Granta Autonomy, the maker of the Hornet XR autonomous unmanned aerial vehicle (UAV) systems. Founded in 2009 as a software development company, Granta later branched out into mechanical and electronics engineering, and started developing products for military use after Russia invaded Ukraine in 2014.
“We applied our experience in high-tech and engineering to the development of products for the modern battlefield. Every citizen shares responsibility for our defence, and by using our technology expertise in this area we can achieve the highest power multiplier as a small country,” says Gediminas Guoba, CEO at Granta Autonomy.
Other Lithuanian defence companies have also used its technology know-how to develop cutting-edge MilTech solutions. For instance, laser manufacturer Brolis Semiconductors has also pivoted after 2014, even establishing a separate division focused on developing defence and security applications of the company’s electro-optical and laser systems. The company’s products now range from dismounted soldier systems and border surveillance solutions to OEM projects for airborne and naval applications.
Developing most in-demand technologies
With the most intensive use of drones in a military conflict in history, Russia’s war in Ukraine has shown that the era of armed drone use has arrived. According to Granta Autonomy’s CEO Guoba, unmanned aerial vehicles are applied in increasingly numerous ways:
“At the beginning of the war in 2014, drones were used almost exclusively for reconnaissance, but they were soon followed by grenade-throwers, the so-called kamikaze drones, drones carrying large payloads, and drones that can reach targets hundreds or even a thousand kilometres away. In the past, such results could only be achieved with very expensive military equipment. Today, drones allow us to reach targets efficiently and use munitions more effectively.”
Lithuania’s burgeoning defence industry has kept up with the rapid proliferation of drone technologies, manufacturing both drones and anti-drone solutions. Granta’s compact, jamming-resistant Hornet XR reconnaissance aircraft has a powerful optical module that allows drones to see important details even from an altitude of 1 km, and a sensitive thermal camera for night missions. Another drone producer Unmanned Defence Systems makes both low-cost.
Catfish Target UAVs, meant to protect high-value UAVs and aircraft, and heavy-duty Partisan Reconnaissance UAVs with a low radar signature. Meanwhile, Kaunas-based NT Service produces SkyWipers – portable anti-drone devices designed to jam the remote control, video transmission and autonomous navigation signals of drones.
Ukrainian feedback accelerating new solutions
All aforementioned Lithuanian-made defence solutions have been battle-tested in Ukraine. Close ties between the two countries ensure that real-time feedback reaches Lithuanian manufacturers, which is an invaluable advantage when developing products that provide an edge on the battlefield.
“Our specialists go to Ukraine to test our products, share insights with Ukrainian soldiers, and develop solutions that would be the most efficient on the battlefield. We have seen first-hand on several occasions that it is this experience and the advanced solutions born from it that are highly appreciated by our Western partners,” says Gediminas Guoba.
Ukraine is not Lithuania’s defence sector’s only client. In addition to supplying the Lithuanian Armed Forces, Lithuanian producers also export their solutions to other NATO countries. For instance, NT Service’s SkyWipers are used by the Romanian Armed Forces, while Brolis Semiconductors was selected to supply laser sights for the Belgian army last year.
What does the future hold for Lithuania’s defence industry?
Lithuania’s defence ecosystem is currently enjoying strong upwards momentum, and is looking to grow further. According to Granta Autonomy’s CEO, high technology is the area where the country can successfully exploit its potential:
“We will not be able to produce tanks, rifles and long-range missiles ourselves in the near future, but we are already developing lasers, anti-drone devices and UAVs, and we are one of the leaders in the region,” says Gediminas Guoba.
Strategically positioned within the European Union and on NATO’s eastern flank, Lithuania could also serve as a base for international defence production manufacturers.
“Our partnerships with global defence production leaders like Rheinmetall and the success of local pioneers in unmanned systems and electronic warfare both underscore our capabilities and commitment to cutting-edge technology,” says Elijus Čivilis, General Manager at Invest Lithuania. “In Lithuania, defence production manufacturers can access a robust network of partners, as well as a pool of specialists with the necessary manufacturing skills.”
To keep the sector on its growth trajectory, Lithuania is stepping up state support for defence innovation. With nearly €200 million earmarked for drone procurement over the next six years, the country is focused on developing its own military capabilities in the latest and most relevant defence technologies.