Russia keeps hitting Ukraine’s arms plants. Now private developers can dig them space underground—and sell or rent it to them

Ukraine's Prime Minister announced on October 22 that private investors can now build underground facilities for arms production, following the government's decision to open the construction of such spaces to private investors effective from that day. This move comes as Russian strikes intensify and the need for more space for arms makers becomes more urgent.

The Defense Ministry reported on December 9 that over UAH 1.5 billion (approximately $36 million) in budget support has helped war-damaged defense firms restore operations. Deputy Defense Minister Hanna Hvozdiar confirmed that underground complexes are under construction to relocate or duplicate critical plants. The new model ensures that the state budget doesn't bear any additional burden, as defense firms can either buy, lease, or take the space for use.

If they pay developers using funds from state contracts, a portion of the cost could return to the budget. Developers build the facilities using their own or raised funds, while arms makers move in. The mechanism applies to new sites as well as existing production, with a minimum of 25% of the facility's total area reserved for production.

International partners funding weapons production will have their components enter Ukraine free of import duty and VAT, with customs inspection and clearance simplified through a single window.