Defence market in Latvia

Latvia’s defence sector is rapidly evolving, driven by a commitment to modernization and international cooperation, particularly with the North Atlantic Treaty Organization (NATO). The country’s priorities include: 

  • strengthening its military capabilities
  • enhancing cybersecurity
  • improving defence infrastructure

Latvia is strengthening its defence sector through partnerships with international allies. Canada, as the lead of the NATO multinational brigade, plays a key role in supporting this effort.

Key opportunities for Canadian Defence companies in Latvia

  • Cybersecurity solutions: Latvia’s commitment to enhancing its cybersecurity capabilities, including electronic warfare systems, presents opportunities for Canadian firms specializing in digital defence technologies and solutions
  • Military technology procurement: As Latvia modernizes its military forces, there is demand for advanced military hardware, secure and tactical communication systems, and surveillance technologies that Canadiancompanies can provide.
  • Training and capacity building: There are opportunities for Canadian companies to offer military training programs, consulting services, and support for defence capacity-building initiatives aligned with NATO standards

Industry highlights

CAD $1.8B — Latvia’s 2024 defence budget

10% — Expected CAGR for Latvia's defence budget between 2024 and 2028

5G test site — NATO allies can jointly develop, test, and demonstrate at Latvian National Armed Forces’ state-of-the art 5G test site

3.45% — Expected share of GDP spending on defence in 2025

CAD $5M — Canada’s contribution towards the Drone Capability Coalition co-led by Latvia and the United Kingdom

2,200 — Canadian soldiers  based in Latvia as part of NATO’s Operation Reassurance

Notable challenges for Canadian Defence companies in Latvia

  • Regulatory compliance: Navigating Latvia’s defence regulations, NATO standards, and export requirements for military, dual-use, or strategic goods can be complex. This is especially true for companies that are new to these processes in the European market.
  • Market competition: Canadian firms face stiff competition from well-established European and American defence companies. These companies have a strong foothold in Latvia's defence sector and may limit opportunities for new entrants.  Canadian companies are estimated to capture only approximately 1% of the defence market share. 
  • Limited Market Size: Latvia’s 2025 defence budget is a relatively modest amount of EUR 1.5 billion (approx CAD $1.62 billion). However, joint procurement initiatives with neighboring Baltic states and pan-European partnerships may offer more opportunities.

Latvian business landscape

Latvia’s defence sector follows a commitment to enhance national security and meet NATO obligations. The country is increasing defence spending, prioritizing military modernization, and developing new capabilities in response to regional security challenges. Key ongoing initiatives include investments in air defence systems, armoured vehicles, and improvements to military infrastructure. Through the newly created State-owned Defence Industry Corporation, the Latvian government actively encourages foreign investment in defence technologies and services that align with its security goals.

Latvia and Canada maintain close ties on defence. Canada plays a significant role in safeguarding the Baltic countries, serving as the lead framework country for NATO allied forces stationed in Latvia. The Government of Canada pledged CAD $2.6 billion to extend and enhance its Latvian mission for three years, starting in 2023/2024. This investment includes acquiring and placin critical weapon systems in the Baltics  and extends support for intelligence and cyber operations.

Summary

Latvia is an attractive market for defence companies, particularly those specializing in cybersecurity, military technology, and training services. With its focus on military modernization, strong NATO ties, and national security, Latvia’s defence sector offers valuable opportunities for Canadian businesses seeking to establish a presence in the European defence landscape. Additionally, joint procurement initiatives with neighboring Baltic countries could create further export opportunities for Canadian firms.

For more information on defence opportunities in the Latvian market, please contact Regional Senior Trade Commissioner for the Baltics, Nicolas Lepage  (nicolas.lepage@international.gc.ca) - defence.

Additional Information

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