Canada’s first-ever Defence Industrial Strategy (DIS) marks a genuine shift in how Ottawa thinks about sovereignty, security, and economic resilience. After decades of treating defence procurement as a back-office function, the government is now framing it as strategic statecraft — linking military readiness, industrial policy, innovation, and economic security. The creation of a Defence Investment Agency and the adoption of a new “Build–Partner–Buy” framework represent a structural effort to align defence spending with sovereign capability and long-term industrial growth.
The strategy is ambitious. It aims to increase Canadian defence industry revenues by more than 240 per cent, grow defence exports by 50 per cent, and create 125,000 new jobs over the next decade. It rightly recognizes that in an era of great-power competition, supply chain fragility, and technological disruption, national security and economic policy can no longer operate in separate silos.
But if the DIS is meant to be a true “paradigm shift,” it needs an Indo-Pacific gear. The Indo-Pacific is where defence demand is rising fastest, where supply chains are being rewired, and where trusted co-production and dual-use technology partnerships can deliver the scale Canada is seeking. This is not about replacing the United States, Europe, or Five Eyes as foundational partners. It is about better aligning Canada’s defence-industrial ambitions with where the world is moving.
Three areas of the strategy in particular require deeper Indo-Pacific focus: partnerships, exports, and supply chains—especially critical minerals.
A paradigm shift — with a regional blind spot
The strategy makes clear that Canada must diversify beyond an overwhelming reliance on the United States. It commits to building an “ambitious” and “comprehensive” defence-industrial partnership with the European Union and the United Kingdom. Importantly, it also signals that Canada will “seek similar opportunities to collaborate with partners in the Indo-Pacific, in particular Australia, New Zealand, Japan, and the Republic of Korea.”
That is a positive start. Canada’s defence co-operation with Japan, South Korea, Australia, and New Zealand has deepened significantly in recent years, particularly since the launch of the Indo-Pacific Strategy in 2022. Japan is ramping up defence spending and investing heavily in long-range strike, cyber, and space capabilities. South Korea has become one of the world’s fastest-growing defence exporters, supplying advanced systems to Europe and Southeast Asia. Australia’s AUKUS-driven defence modernization is transforming its industrial base, especially in submarines, advanced technologies, and undersea systems.
These countries are natural partners for Canada. But the Indo-Pacific is not limited to four advanced economies — and that is where the strategy risks undershooting the moment.
The Southeast Asian build-up
The DIS is candid that Canada has not consistently capitalized on export opportunities, and that this must change. It commits to standing up a dedicated unit to lead and co-ordinate a whole-of-government export strategy, including new “Deal Teams” to pursue major international contracts. It also argues for more “boots on the ground” through trade commissioners, defence attachés, and a stronger presence at major global defence and aerospace trade shows.
Yet in the strategy’s export section, Southeast Asia and the Indo-Pacific as a whole are notably absent. The emphasis falls heavily on Europe and the U.K. If Canada intends to increase defence exports by 50 per cent, the Indo-Pacific cannot remain an afterthought.
Singapore—long a technological and defence innovation hub—illustrates why. It is a regional marketplace and convening platform for defence and dual-use technologies. The Singapore Airshow is one of the world’s largest aerospace events, and it sits alongside other regional defence and security exhibitions that draw military decision-makers, procurement officials, global defence companies, and tech firms.
For Canada, this is where the export strategy can build a pipeline: not just sales, but partnerships, sustainment arrangements, and subsystem integration opportunities.
Furthermore, defence investment across Southeast Asia has grown steadily over the past decade. Countries such as Indonesia, the Philippines, and Singapore are modernizing their armed forces in response to maritime tensions, grey-zone coercion, and broader regional uncertainty.
Indonesia has pursued major procurement deals in recent years for fighter aircraft, submarines, and naval modernization. The Philippines is pressing ahead with a multi-phase Armed Forces modernization program focused on maritime domain awareness, coastal defence, and air capabilities.
These are not marginal markets. The London-based International Institute for Strategic Studies' annual Asia-Pacific Regional Security Assessment notes that Southeast Asian countries, including Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, increased combined spending on defence procurement and R&D by US$2.7 billion between 2022 and 2024, reaching US$10.5 billion, alongside a push to expand partnerships and reduce import dependence.
Canada has already laid the groundwork here. Last fall, during Indonesian President Prabowo Subianto’s visit to Ottawa, Canada and Indonesia signed a defence MOU and concluded negotiations on a Comprehensive Economic Partnership Agreement. Canada has recently deepened co-operation with the Philippines, including through a visiting forces agreement — its first such agreement outside NATO. Canadian naval deployments and increased engagement in the South China Sea have also raised Ottawa’s security profile in the region.
Importantly, an Indo-Pacific export strategy does not need to mean chasing platform sales in competitive markets where Canada is not positioned. It can mean focusing on areas where Canada has credible strengths—training and simulation, in-service support, maritime domain awareness, sensors, secure communications, cyber resilience, space-enabled capabilities, and dual-use AI—many of which align with the DIS’s sovereign capability priorities.
Done well, Indo-Pacific export engagement becomes a force multiplier for the DIS’s domestic goals: it helps Canadian firms scale, smooth demand cycles, and justify investment in production capacity and workforce development.
The India opportunity
Another potential missed opportunity, both in terms of exports and partnerships, may be India.
India is one of the world’s largest defence importers and is simultaneously pursuing an ambitious defence industrial agenda. Its procurement plans span aerospace, naval systems, unmanned platforms, cybersecurity, space, and advanced electronics. Over the next decade, India’s defence modernization could amount to hundreds of billions of dollars.
Canada has strengths that align with Indian needs: aerospace components, space systems, AI, quantum technologies, simulation and training, and critical minerals essential to advanced weapons systems.
Moreover, Canada–India relations are gathering momentum. The two countries are launching negotiations on a Comprehensive Economic Partnership Agreement and have committed to doubling bilateral trade by 2030. Defence-industrial co-operation could serve as a key pillar in the relationship — especially if structured around co-development, technology transfer, and supply chain integration rather than simple sales.
Supply chains and critical minerals: the Indo-Pacific link
The Defence Industrial Strategy is strongest when it links industrial policy to supply chain resilience — particularly around steel, aluminum, and critical minerals. Canada produces 10 of NATO’s 12 defence-critical raw materials, including aluminum, gallium, germanium, graphite, and tungsten.
But critical minerals are not just a transatlantic issue. They are central to Indo-Pacific geopolitics. Japan and South Korea are aggressively diversifying their supply chains away from China. Australia is expanding its rare earth and lithium production. India is seeking secure access to battery materials and advanced inputs for its defence electronics sector. Southeast Asian states are increasingly part of the processing and midstream ecosystem.
Canada’s critical minerals strategy, if aligned with the DIS, could position Ottawa as a trusted supplier and co-investor in Indo-Pacific supply chains—not just as a raw-material exporter, but as a processing and value-added partner.
From transatlantic diversification to Indo-Pacific integration
To be clear, the strategy’s focus on Europe is understandable. Russia’s war of aggression in Ukraine has exposed ammunition shortages, industrial bottlenecks, and alliance interoperability gaps. Canada’s participation in European defence industrial initiatives is logical.
But diversification cannot simply mean shifting from overdependence on the United States to overconcentration in Europe.
Canada’s Indo-Pacific Strategy committed Ottawa to a sustained regional presence. Defence MOUs, naval deployments, and expanded attaché networks have followed. The industrial dimension must now catch up. That means:
- Embedding Indo-Pacific markets in the new government’s Export Unit mandate
- Positioning Canadian firms at major regional defence expos and trade shows
- Pursuing co-development agreements, not just sales
- Integrating critical mineral and advanced technology partnerships into defence diplomacy
- Ensuring the Defence Investment Agency views the Indo-Pacific as a growth frontier, not a secondary theatre
If Canada is serious about raising defence exports and growing the sector by 240 per cent, Europe alone will not be sufficient.
Conclusion
Canada’s defence industrial strategy is, in the document’s own words, a paradigm shift. It reflects a growing recognition that economic security, innovation policy, and military readiness are intertwined. It signals a willingness to use procurement as a tool of national strategy. It acknowledges the fragility of supply chains and the centrality of sovereign capability.
Those are major advances. But strategy is ultimately about alignment — aligning tools with geography, ambition with markets, and industrial policy with geopolitical reality. The geopolitical centre of gravity is shifting toward the Indo-Pacific. Defence spending, technological competition, and supply chain restructuring are all accelerating in the region.
If Canada’s new Defence Industrial Strategy is to fully realize its ambitions, it will need an Indo-Pacific gear — not as a footnote, but as a core driver of partnerships, exports, and supply chain integration. The next step is to ensure that Canada builds not only for sovereignty at home and solidarity in Europe — but for relevance and opportunity across the Indo-Pacific.
