Billions of dollars are set to be invested in defence in Canada: Will organizations be able to benefit from this?

Canada is embarking on a major cycle of defence investment. Having allocated 2 per cent of its GDP to defence in 2025–2026, the federal government is planning to spend over $50 billion in 2026–2027 and aims to increase this investment to 5 per cent of GDP by 2035, in line with NATO’s new commitments.

Ottawa has also introduced the ‘Buy Canadian’ Strategic Procurement Framework, which came into force on 16 December 2025. This framework aims to give greater priority to Canadian suppliers, materials, and content in federal procurement, particularly in strategic sectors such as defence.

New opportunities for Canadian businesses

• Ottawa aims to modernize, simplify, and speed up military procurement, notably through the Defence Investment Agency.
• The ‘Buy Canadian’ policy prioritizes Canadian suppliers, materials, and content in federal strategic procurement.
• These new opportunities are no longer limited to large corporations. Innovative SMEs can now join the supply chain in sectors such as AI, drones, robotics, cybersecurity, software, sensors, industrial coatings, and infrastructure.
• For SMEs, market access can be achieved through subcontracting, specialized tenders, innovation programmes, technology partnerships or integration into an existing supply chain.
• In addition to the Defence Investment Agency, other entry points exist, such as:
  • The Business Development Bank of Canada,
  • IDEaS (a federal defence innovation programme)
  • Defence Construction Canada (which manages infrastructure contracts)
  • MERX
  • CANSEC (Canada’s leading defence industry trade show)
• Access remains complex: security requirements, procurement rules, and the need to demonstrate Canadian content and its necessity.

Defence, a new driver of industrial policy

Since Prime Minister Mark Carney’s election, Ottawa has been giving defence a broader industrial and economic focus than under the previous prime minister’s approach. The rise in military spending therefore represents more than just an increase in budgets. It forms part of a broader vision in which defence becomes a lever for strengthening Canada’s strategic autonomy, securing supply chains, supporting critical technologies, and boosting the country’s industrial capacity. For Canadian companies, the opportunity is therefore no longer simply to sell to the government, but to demonstrate how their technologies, products or expertise contribute to this new vision.

This direction is expected to guide federal decision-making for several years to come. The Liberals hold a majority in the House of Commons, and Canada has committed to increasing its defence spending to 5 per cent of GDP by 2035. Companies that act swiftly will be best placed to benefit from this transformation by establishing their credibility with decision makers now, understanding procurement mechanisms, and clearly demonstrating their Canadian added value.

The impacts for businesses

1. A rapidly growing market

Investments will extend far beyond the traditional defence industry and create opportunities in technology, manufacturing, artificial intelligence, cyber security, advanced materials, energy, and infrastructure.

2. Canadian businesses have an advantage

Under the ‘Buy Canadian’ policy, economic benefits, intellectual property, local suppliers, and manufacturing capacity are becoming increasingly important criteria.

3. SMEs can become part of the defence ecosystem

Market access does not rely solely on major federal contracts. SMEs can position themselves through subcontracting, industrial partnerships, innovation programmes or integration into the supply chains of major suppliers.

4. Time is on the side of early entrants

Companies that start building relationships with decision makers and stakeholders in the ecosystem now will be better placed to capitalize on the investments announced over the coming years.

NATIONAL can support organizations

Companies hoping to capitalize on the announced defence investments should start positioning themselves now. In this market, the challenge is not limited to identifying business opportunities. It is also necessary to understand the priorities guiding elected representatives and the civil service in order to highlight, at the right moment, the company’s contribution to the federal government’s objectives.