The Czech Republic continues its modernization of the Armed Forces, driven by regional security concerns and NATO commitments. Defence spending in 2025 is set at CZK 160.8 billion, representing 2% of GDP, with CZK 154.4 billion allocated directly to the Ministry of Defense. The budget reflects a strategic shift toward investment-heavy programs, with 29.5% allocated to equipment procurement.
Defence market in Czechia
Key opportunities for Canadian companies in the Czech Republic
- Modernization of land forces and air defence
- Expansion of command and control systems
- Logistics and infrastructure upgrades
Notable challenges for Canadian companies in Czech Republic
- Restricted tendering: Most public contracts are awarded through restricted tenders, limiting open competition.
- Tenders: The time for submitting bids in tenders is often very short.
- Regulatory complexity: Companies must fully comply with European Union (EU) and NATO standards, export controls, and technology transfer regulations.
Industry highlights
2.09% — Defence sector’s contribution to GDP in 2024
CAD $10.5B — Planned defence spending for 2025
90% — Share of defence production that is exported
3% — Planned contribution to GDP in 2030
130 — Number of Czech companies actively engaged in Defence
CAD $3.2B — Total value of defence exports in 2024
Czech Republic's business landscape
The Czech Republic's defence sector is undergoing a significant transformation, driven by strategic investments and modernization efforts. The government plans to increase the defence spending to 3% by 2030. This financial commitment supports a broad modernization agenda, including procurement of advanced military equipment such as:
- F-35A fighter jets
- CV90 infantry fighting vehicles
- Embraer C-390 transport aircraft
These acquisitions aim to enhance national defence capabilities, fulfill NATO obligations and reinforce the Czech Republic’s role in collective security. The defence sector is increasingly viewed as a driver of innovation and industrial growth,. There is a particular focus on developing domestic capabilities and integrating Czech companies into global supply chains.
The Ministry of Defense’s Industry Development Support Strategy outlines a comprehensive framework for:
- sustaining and expanding national defence capabilities
- emphasizing interoperability
- supply chain security
- alignment with EU and NATO standards
Czech companies are increasingly involved in the development, production, and maintenance of key defence systems. This positions the country as an active contributor to the European defence ecosystem.
Summary
The Czech Republic has been a proactive NATO member since 1999. The country’s defence strategy aligns with NATO’s collective security goals, identifying Russia and China as key threats.
In 2025, defence spending is estimated to be 2% of GDP, amounting to about CZK $160.8 billion.
Between 2026 and 2030, the government will implement a gradual annual increase of 0.2% of GDP, aiming to reach 3% of GDP by 2030.
The Czech President has indicated an openness to raising defence spending to 5% of GDP, if NATO reaches a consensus on new targets.
This would include shares of 3.5% for strengthening defence capabilities and 1.5% for dual-use infrastructure, such as improving transport and logistics systems that support both military and civilian needs.
The Czech defence market in 2025 presents strong growth, strategic procurement opportunities, and regional collaboration potential. While regulatory and tendering challenges exist, suppliers with innovative solutions and NATO-aligned capabilities will find opportunities in an expanding market.
For more information on Defence in the Czech Republic, please contact Trade Commissioner, Martina Taxová (martina.taxova@international.gc.ca) - defence.