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Canada Invests $800M in Defence Industrial Strategy

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  Published in Stocks and Investing on Wednesday, February 18th 2026 at 1:36 GMT by The Globe and Mail
      Locales: Ontario, Quebec, Alberta, CANADA

Brampton, Ontario - February 18th, 2026 - The Canadian government today unveiled a comprehensive new defence industrial strategy, backed by a substantial $800-million investment fund, signaling a firm commitment to bolstering the nation's military-industrial sector. The initiative, announced in Brampton by Prime Minister Justin Trudeau and Minister of Industry Francois-Philippe Champagne, aims to reduce Canada's reliance on foreign suppliers for critical military equipment and foster innovation within the domestic defence landscape.

The announcement comes at a pivotal moment. For years, Canada's defence industrial base has lagged behind that of its NATO allies, with a shockingly low percentage of the national defence budget - a mere 4%, as highlighted in a 2022 report by the Auditor-General - actually spent within Canada. This dependence on international sources has raised concerns about supply chain vulnerabilities, particularly in the wake of geopolitical instability, notably Russia's ongoing invasion of Ukraine, and increasing pressure to meet NATO spending targets.

"For too long, Canada has been too reliant on other countries when it comes to defence," Trudeau stated during a press conference. "We need to be able to produce more of the equipment we need here at home." Champagne echoed this sentiment, emphasizing that the strategy will "encourage innovation and create good-paying jobs for Canadians while strengthening our defence capabilities."

The $800-million fund will be administered by the Canada Development Bank and structured around three key streams. The largest, a $500-million "scaled-up production" stream, will provide support to established Canadian companies seeking to expand their existing operations and increase production capacity. This will allow firms already involved in the defence sector to ramp up output and compete for larger contracts. A $250-million "innovation stream" is dedicated to nurturing early-stage companies developing cutting-edge defence technologies. This funding will be crucial for startups and small businesses seeking to translate innovative ideas into viable products and services.

Recognizing the importance of regional economic development, a $50-million "regional stream" will specifically support projects located in smaller communities across Canada, ensuring that the benefits of the defence industrial strategy are distributed more broadly. This component addresses concerns about concentration of economic activity in major urban centres and aims to create jobs and opportunities in areas that may have previously been overlooked.

The strategy prioritizes several key technological areas deemed critical to Canada's future defence needs. These include artificial intelligence (AI), which is increasingly vital for modern warfare and defence systems; cybersecurity, essential for protecting critical infrastructure and sensitive data; naval technology, reflecting Canada's significant maritime interests and responsibilities; and unmanned systems, encompassing drones and robotics for surveillance, reconnaissance, and other applications.

Beyond direct financial investment, the government has pledged to streamline procurement processes, making it easier for Canadian companies to bid on and win government contracts. Historically, complex and bureaucratic procurement procedures have posed a significant barrier to entry for many domestic firms. Simplifying these processes is seen as a crucial step in leveling the playing field and encouraging greater participation from Canadian businesses.

However, defence experts caution that the new strategy is just the beginning of a long-term effort. While the $800-million investment is a welcome step, building a truly competitive and resilient defence industrial base will require sustained funding and a consistent commitment to supporting the sector over the coming years. The effectiveness of the strategy will also depend on the government's ability to successfully attract foreign investment, foster collaboration between industry and academia, and develop a skilled workforce capable of meeting the demands of a growing defence sector.

"This is a step in the right direction, but it's a marathon, not a sprint," noted Dr. Emily Carter, a defence analyst at the Canadian Institute for Strategic Studies. "It will take time and sustained investment to build a truly competitive defence industrial base that can deliver the equipment and technologies Canada needs to protect its interests."

The government is expected to release further details about the application process for the funding streams in the coming weeks, with the first investments anticipated to be announced later this year. The long-term goal is to position Canada as a key player in the global defence market and ensure that the country is self-sufficient in critical military technologies.