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Defence Industry

Developing the defence industry and increasing global security is an essential priority for Estonia, as reflected in its commitment to increasing defence spending to at least 5% of GDP by 2026. The defence sector has experienced remarkable growth, with exports rising from €46 million in 2020 to €350 million by 2024.


Estonia offers a thriving environment for defence industry projects, supported by the development of a defence industry park in Pärnu County, various funding and development programmes, and a network of established, high-performing defence companies.

of GDP - Estonia’s planned defence spending by 2026

in defence spending per GDP in NATO

in the EU in the Global Cybersecurity Index (GCI)

Defence industry measures

Name of measure Description Activity / Type of assistance Conditions Recipient Link
Defence Fund The Defence Fund invests directly in innovative technology companies and growth companies in the traditional economy that are developing a technology or product relevant to defence or security. Equity offer The state acquires a minority holding of up to 49% in the company; the investment ranges from €0.5 million to €10 million per company; the investment is made with a private investor on market terms (minimum private investor funding is 30% of the project); the investment is made in companies established in Estonia and other NATO member countries (if it creates added value for the Estonian economy). Start-ups, SMEs and large enterprises Direct investments of the SmartCap Defence Fund – SmartCap
NATO Innovation Fund (NIF) Venture capital fund backed by all NATO members, which exceeds €1 billion. The fund focuses on deep technology companies looking for solutions to defence and security challenges. The NIF has unique access to nearly 90 NATO-related test centres and more than 6,000 scientists of the Allied countries. Estonian companies can also approach the NIF to attract investment. Equity Investments are made in companies developing dual-use technologies. The maximum investment in a company is €15 million with the possibility of further investment. High-risk projects, for all companies of NATO member countries https://www.nif.fund/
Industrial loan Industrial loan is a subordinated loan designed to help increase the self-financing rate of a project in the eyes of a credit institution. Companies can use industrial loans to co-finance investments in plant, property and equipment and intangible assets with a bank or a leasing company. Loan The loan amount is up to €2 million, but not more than 40% of the cost of the project. The loan interest is generally equal to the interest rate of the credit institution, but increases depending on the size of the holding of the EIS in the project. The term of the loans is up to 15 years, no collateral is required. SMEs in the manufacturing, mining, electricity generation, transmission and distribution, and waste treatment sectors. Industrial loan | EIS
Loan guarantee Loan guarantee helps companies that want to take out a bank loan, lease or bank guarantee (including a letter of credit) but whose business history or collateral does not satisfy the bank. Guarantee The amount of the guarantee for small or medium-sized enterprises is up to €25 million, for larger enterprises up to €2.25 million. The guarantee amounts to 50–80% of the commitment. The guarantee fee is 0.5–3.8% of the surety balance. SMEs and large enterprises Loan guarantee | EIS
Export loan The EIS export loan is intended for financing transactions involving the export of goods produced in Estonia and is issued to an Estonian exporter. The purpose of the export loan is to give the foreign buyer a payment term of at least two years and to finance the payment of the credit insurance premium and, if necessary, the production of goods to be sold to the foreign buyer. The loan is not granted in the sector of production, processing and marketing of arms and ammunition. Loan The loan amount is up to €15 million per foreign buyer, but not more than the insured credit limit. The loan interest is at least equal to the market interest rate. The loan period is 2–10 years. All exporters Export loan | EIS
Large scale investment grant The grant is meant for investment in the establishment of a new production unit, which increases the company’s competitiveness, export capacity and added value. Grant The amount of the grant is up to €20 million. The self-financing must be at least 85%. A company registered in the Estonian Commercial Register may apply for the grant if it plans to:
invest at least €100 million in fixed assets
and create at least 30 new jobs as a result of the investment.
The state cannot own more than 49% of the applicant or a company belonging to the same group as the applicant.		 SMEs and large enterprises Large scale investment grant – EIS
Support for investments The grant is meant for making a new investment in the manufacturing sector that contributes to the creation of higher added value and increasing the international competitiveness of the company. Grant The amount of the grant is €1–3 million. Self-financing must be at least 85%, so the amount of the investment must be at least €6.7 million. SMEs and large enterprises Major investor grant – EIS

Name of measure Description Activity / Type of assistance Conditions Recipient Link
NATO DIANA Accelerator Programme
in Estonia		 The goal of the NATO DIANA Accelerator Programme is to support deep technology start-ups that contribute to national security and the defence sector. The accelerator offers a high quality training programme, an international mentoring network, test centres, grants (€100,000 for development and an additional €300,000 for the best). Dual-use technologies are developed in the accelerator and it brings together innovators and end-users of new technologies. Accelerator Technology readiness level (TRL) 4+, dual-use innovative solutions. Start-ups https://www.diana.nato.int/, https://www.startupincubator.ee/nato-diana/
European Defence Fund The European Defence Fund allows companies to develop products in pan-European consortia. The Ministry of Defence provides co-financing for the projects of the Defence Fund and supports Estonian companies in joining pan-European consortia. Grant A consortium can be formed by at least three companies or institutions from three different European Member States and Norway. The project must comply with the objective of the specific call (scope and targeted activities), and applications can be filed for two directions: development and research. Start-ups, SMEs and large enterprises https://kaitseministeerium.ee/et/eesmargid-tegevused/teadus-ja-arendustegevus/euroopa-kaitsefond
Product development grant The grant allows a company to develop an internationally competitive new or substantially modified product or service. From a defence industry perspective, the support focuses on dual-use technologies. Grant The maximum grant is €500,000 and the grant rate is 25–45% (depending on the size of the company). The company’s average turnover over the last 2 years must be at least €200,000. The project must address at least one of the RDIE focus areas. Product development is supported within the meaning of Article 25 of the General Block Exemption Regulation. Start-ups, SMEs and large enterprises Product development grant – EIS
Applied Research Programme Support for applied research and experimental development is available for the development of new technologies, products, services, or processes. In addition to funding, advisory services on development activities and business matters are also provided. Support can also be granted for the development of single-use (lethal) technologies. Grant Support for small-scale projects ranges from €100,000 to €150,000, while large-scale projects can receive up to €2 million. The support intensity (depending on the size of the company and the type of activities) ranges from 25% to 80%. Start-ups, SMEs and large enterprises Applied Research Programme – EISa>
Applied Research Programme (Defence Industry Call) Additional thematic application round for grants for applied research aimed at defence companies. Grant The maximum support per project is up to €500,000, with a total budget of €5 million, focused on 10 priority topics/areas. The call will open in May, the deadline is in July, and the results will be announced in autumn. Start-ups, SMEs and large enterprises Applied Research Programme – EIS
Development grant Within the scope of the business development programme of the Ministry of Defence, the Defence Forces will test products from the Estonian defence industry to provide feedback about prototypes and expertise for product development. The amount of the grants per year is €1.2 million. According to the contract made between the recipient of the development grant (the company), the Ministry of Defence and the Defence Forces and to the extent possible, the Defence Forces will ensure the use of military expertise and, in the presence of the staff of the Defence Forces, the equipment, machinery and training areas of the Defence Forces for testing. Testing will be coordinated by the Applied Research Department of the Estonian Military Academy. Grant Thematic competitions will be organised. Companies registered in Estonia can participate and the maximum amount of a grant per project is €200,000. Product development at technology readiness level (TRL) 4–7 will be supported. The duration of a development project is up to 3 years. The share of the aid will be 25–45% of the cost of the project, depending on the size of the company. Start-ups, SMEs and large enterprises https://kaitseministeerium.ee/et/eesmargid-tegevused/teadus-ja-arendustegevus/kaitsetoostuse-arendusprojektide-konkurss-2024
Development programme The company development programme supports the implementation of the company’s long-term strategic development plan and increasing its international competitiveness. The grant is meant for the development of the company’s organisation and processes, the development of a product or service, the development of sales and marketing activities, the development people or the purchase of equipment. Grant Mandatory preliminary consultation. The grant can be applied for by a company registered in Estonia that has been operating for at least 2 years and employs at least 8 full-time employees. The company’s export sales turnover for the last financial year is at least €50,000 or the total sales turnover has increased by an average of 5% or more per year over the last 2 financial years. The project contributes to the RDIE focus area. The amount of the grant per company is €500,000. The amount of self-financing depends on the size of the company. Start-ups, SMEs and large enterprises Enterprise Development Programme – EIS
Pre-accelerator Defence Business Lab The pre-accelerator prepares companies for the next stage of development to apply for business accelerator programmes focusing on dual-use technologies (e.g. NATO DIANA Accelerator Programme). Accelerator pilot (Application closed) Applicants must have a technological readiness level of at least 3 or higher. The amount of the grant is €5,000 for prototype development and mentoring. Start-ups Defence Sector Pre-accelerator | Tehnopol Startup Incubator
Tartu Science Park
EstHUB ESTHub is a remote sensing cluster in Estonia that provides a single national platform for searching, downloading and processing satellite data. A new ESTHub value proposition is being created to offer new services to companies. Data Under development All interested parties National Satellite Data Centre ESTHub | Geoportal | Land and Spatial Development Board
Innovation procurement 2% of all public procurements (and 5% of the total monetary value of the procurements) must be innovation procurements. This means that instead of procuring finished products available on the market, the procurements involve developing new innovative solutions to the problem described by the contracting authority.  The contracting authority becomes the first reference customer for the developed solution and the tenderer retains the intellectual property rights, allowing further marketing of the product.  The innovation procurement policy covers all areas, including defence. N/A N/A N/A Innovative public procurement – EIS
Intellectual property protection and strategy consultancy service with a grant Companies are supported in protecting and commercialising the intellectual property generated by their development activities through high-level strategic intellectual property advisory services, training, support materials, etc. Measures supporting the activity. Different IP strategy advice – open to all companies, 5 hours free of charge, thereafter €100/hour. IP training – training courses and seminars/workshops on the strategic use of IP for companies or groups (including public sector institutions) on the basis of a price list. Development cooperation experts in product and service development – first 6 hours free of charge, thereafter €100/hour. Finding and connecting development partners and service providers around the world, reaching out to development cooperation networks and forwarding requests and offers for cooperation. Technology intelligence – search for technologies, analytics and monitoring based on patent and scientific literature, first 5 hours free of charge, thereafter €100/hour. Start-ups, SMEs and large enterprises Intellectual property and technology transfer – EIS
Estonian Space and CERN Office The Estonian Space and CERN Office mediates business opportunities and invitations to tender offered by the European Space Agency (ESA) and the European Centre for Nuclear Research (CERN) to Estonian companies. It also organises information days and seminars, study tours and matchmaking events. Internationalisation The specific conditions depend on the programs of ESA and CERN. EIS representatives offer consulting services to connect Estonian companies with the relevant measures in ESA and CERN. All companies https://eis.ee/eesti-kosmoseburoo/;  https://eis.ee/tootearendus-ja-innovatsioon/cern/

Name of measure Description Activity / Type of assistance Conditions Recipient Link
Experimentation framework In the regulatory sandbox, the state allows for the temporary testing of unregulated or inconsistent solutions, such as new technologies or business models, under specified conditions and supervision. Testing and regulations Under development Under development From the Accelerate Estonia Programme – Accelerate Estonia
Experimentation Programme of the Defence Forces The Experimentation Programme is aimed at the structural units of the Defence Forces and the Defence League that can submit applications to the programme to find solutions to capability gaps using new technologies. Existing solutions (‘off-the-shelf products’) are tested through experimentation and their integration into military units will be tested in order to find practical outputs to address sectoral problems in the military. The budget of the programme is €500,000 per year. The programme is not narrowly targeted at Estonian companies, as the goal is to increase the wider uptake of new technologies and solutions in the Defence Forces and the Defence League. The implementation of the programme is coordinated by the Analysis and Planning Department of the Joint Headquarters of the Estonian Defence Forces. Testing N/A Start-ups, SMEs and large enterprises N/A
Remote Sensing Research and Development Centre of the Estonian Military Academy The Centre offers cross-agency applied research and know-how to integrate the potential of remote sensing technologies in the area of internal security. In particular, the Centre tests unmanned aerial vehicles and surveillance and counter-measures for unmanned aircraft. A training area can also be used for testing. Testing can be carried out by or with officials from the agencies of the Ministry of the Interior. The Ministry of the Interior cannot offer companies the opportunity of independent testing. The cost of testing depends primarily on the costs incurred in addition to the usual costs. Whether or not additional costs will be incurred depends on the length of time for which the product is tested, whether it can be carried out as part of normal tasks or whether additional officials must be involved. Testing A specific service has not been developed N/A N/A
Centre for Applied Research One of the directions of the Centre is the development of drone technologies, which also directly meets the needs of the Estonian defence industry. The Centre will provide companies with applied research as well as various laboratory services to help improve the quality of defence procurements, enhance combat equipment lifecycle management and support product development. Capacities of the Centre’s laboratory: 1) a climate chamber for large-scale equipment to test the resistance of the equipment to environmental conditions; 2) assessment of subsystems by the accelerated method (temperature, humidity, vibration, pressure, dust and corrosion tests); 3) the electromagnetic emissions and immunity of the equipment can be tested and the radar signals of the test object can be measured in an electromagnetic compatibility (EMC) laboratory; 4) a field test area for testing unmanned aerial vehicles. Development and testing assistance The services are provided according to the price list. Start-ups, SMEs and large enterprises Drone technologies – Metrosert
CR14 The objective of the CR14 Foundation is research and development, and supporting defence cyber security, and to promote international cooperation on cyber security, organise cyber security training and provide cyber security services and advice in the relevant issues. Cyber range Providing services to companies for a fee, depending on their needs. A cyber range is a specific-purpose secure data centre built to guarantee the organisation of modern cyber exercises based on real-life scenarios, to test and validate technologies and to carry out defence developments. Specially developed software and tools are available to create training programmes for individuals to international organisations such as NATO and the European Union. Start-ups, SMEs and large enterprises https://www.cr14.ee/
Estonian Defence Forces Provide product development support and testing opportunities for Estonian companies contributing to the development of defence and dual-use products or services related to national defence needs. Also, in cooperation with the Defence Forces, it is possible to consider sending products for testing both in the subunits of the Ministry of Interior as well as in the allied units and training areas operating in Estonia. Testing Under development Start-ups, SMEs and large enterprises N/A
Defence League Provide product development support and testing opportunities for Estonian companies contributing to the development of defence and dual-use products or services related to national defence needs. Testing Under development Start-ups, SMEs and large enterprises N/A
Center of Excellence for Electronic Warfare of the Estonian Military Academy Provide product development support and testing opportunities for Estonian companies contributing to the development of defence and dual-use products or services related to national defence needs. Testing Under development Start-ups, SMEs and large enterprises N/A
Nurmsi training area The Unmanned Aerial Vehicle Training Centre makes it possible to test and develop products in this field in cooperation with the defence industry and provide the industry with product testing opportunities. Testing Under development Start-ups, SMEs and large enterprises N/A

Name of measure Description Activity / Type of assistance Conditions Recipient Link
Defence Industry Park The objective of the Defence Industry Park is to create a modern manufacturing environment that supports the capacity of Estonia to produce ammunition, munitions, explosives, weapons and drones, and to make it possible to launch production quickly. Another objective of the Defence Industry Park is to create an attractive business and production environment for the defence industry companies and to provide them with the services they need. The Defence Industry Park aims to reach industrial production in 2027. Industrial Park The land will be granted for the entrepreneur’s use for a period of 70 years. The land may be used for the production of ammunition that does not contain explosives, ammunition that contains explosives, military explosives, or military explosive materials, as well as for the production of components of the aforementioned items. The land to be made available is located in Ermistu village, Pärnu County. In addition to the area in Ermistu village, the organizer of the selection procedure may also decide, during the course of the selection process, to grant the use of an additional area located in Varinurme village, Ida-Viru County.
Companies participating in the selection procedure must submit their operational plan, which must include detailed information on the product, production volumes, and the proposed timeline. The plan should also describe the desired size of the land area, infrastructure and resource requirements, the net quantity of explosives to be handled, the product’s supply chain, and other relevant information.		 The selection procedure to find suitable entrepreneurs is currently ongoing (applications can be submitted until June 15, 2025). https://www.ametlikudteadaanded.ee/ee/Riigi%20Kaitseinvesteeringute%20Keskus/riigivara/riigivara-enampakkumine/2025/4/9/2441276
Ämari Mini Defence Industry Park The Estonian Centre for Defence Investments offers a defence industry company the opportunity to set up its own production facility in Ämar, where the production of ammunition could start by early 2025 at the latest. There is 6,200 square metre site for this purpose in Ämari, which is equipped with protective walls, where security and safety requirements are guaranteed and where the company can build the necessary production buildings at its own expense. Nitrotol OÜ will start producing ammunition at the Ämari military base as a result of the selective tender organised by the Estonian Centre for Defence Investments. Production will start in spring 2025 (the start of production may be delayed depending on the results of the dispute by the other tenderer). Industrial Park N/A N/A N/A
Military and Disaster Medicine Centre The Military and Disaster Medicine Centre (SKMK) is a subunit of the Estonian Military Academy, whose task is to organise military and disaster medicine training for members of the Defence Forces, reserve medics, medical students and other partners. In relation to this, the SKMK is also involved in research and development in the field of military and disaster medicine in Estonia. Development A service for companies has not been developed, but the centre is open to cooperation if there is mutual interest. N/A https://www.kvak.ee/soja-ja-katastroofimeditsiinikeskus/

Name of measure Description Activity / Type of assistance Conditions Recipient Link
Joint stands and trade missions National joint stands are organised at international trade fairs to help Estonian companies succeed in foreign markets. The action plan for 2025 includes the International Defence Exhibition & Conference IDEX 2025 (February), the International Defence Industry Exhibition MSPO 2025 (September) and the Defence and Security Equipment International DSEI 2025 (September). Service The company has previous export experience and entering or growing in the market of the target country is part of the company’s export strategy. Start-ups, SMEs and large enterprises Visits | Visiidid.ee
Ukraine support measure The new support measure opens the way for Estonian companies to contribute to Ukraine’s victory. The Estonian Centre for Defence Investments opened a measure for the purchase of products or services to the extent of up to 0.25% of GDP, which are suitable for use by the Ukrainian Defence Forces in times of crisis and war. All Estonian companies can offer their products or services. Grant The company must be registered in Estonia. The offered products must be developed (from technology readiness level (TRL) 8) and previously marketed. The product and its components are not subject to export control or intellectual property restrictions when exported to Ukraine. At least 30% of the production process is local. The maximum number of products offered is 15 per applicant. The delivery time of the products offered is up to 24 months from the conclusion of the contract. Start-ups, SMEs and large enterprises https://www.kaitseinvesteeringud.ee/ukraina-toetusmeede/
Export programmes (service designed and delivered according to need) Designed as the first step in exporting technology or relaunching exports to the target country. It provides help in getting to know the target market, understanding one’s business potential and putting in place a systematic entry plan. The main elements of the programme are individual online consultations with consultants, individual market visits to the target country and individual online follow-up. Consultation Export services are intended for companies registered in Estonia. SMEs and large enterprises Export – use export services – EIS
Client-specific export consultation service In the course of the service, defence entrepreneurs are offered the support of a foreign mission both in the development of their business as well as in introducing the target market. Consultation Export services are intended for companies registered in Estonia. SMEs and large enterprises Services of export advisers in target markets – EIS

Useful information

Defence Industry Policy Estonian Defence Directory Estonian defence sector facts sheet