Canada is spending nearly a billion dollars to build drones without buying them from the United States. Ottawa announced March 26 that the National Research Council will invest over C$900 million(https://www.canada.ca/en/national-research-council/news/2026/03/new-programs-to-support-canadas-de...
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Canada is investing C$900 million through the National Research Council to establish a Drone Innovation Hub in Ottawa and Mirabel, Quebec, as part of a broader C$6.6 billion Defence Industrial Strategy aimed at reversing a historical trend where 75 cents of every Canadian defence capital dollar was flowing to the United States. The funding breaks down into C$500 million for aerospace and autonomous technologies, C$241 million for dual-use defence tech SMEs via IRAP, and C$161 million for quantum technology applications, with the ambitious target of awarding 70 percent of federal defence contracts to Canadian firms within a decade.
Canada is spending nearly a billion dollars to build drones without buying them from the United States.
Ottawa announced March 26 that the National Research Council will invest over C$900 million through Canada's Defence Industrial Strategy, a C$6.6 billion plan that publicly acknowledges what the defence community has known for years: 75 cents of every Canadian defence capital dollar was going south of the border before this program existed, according to CBC News. The Drone Innovation Hub — to be located in Ottawa and the Mirabel area of Quebec — is the physical embodiment of that admission. The government wants that money back.
"If you need any other evidence of the need for this research, turn on the newscasts," Defence Minister David McGuinty said at the announcement, per Betakit. He wasn't wrong. Ukraine has 450 drone companies supplying its battlefield, Ukrainian President Volodymyr Zelenskyy said in February, per DroneXL. Canada has been buying from a market shaped by that war. Now it wants its own production lines.
The numbers are real: C$500 million of the NRC funding targets aerospace and autonomous technologies specifically, $241 million goes to an IRAP DI Assist stream for dual-use defence tech small and medium enterprises, $161 million over five years flows into quantum technology for defence applications, and $105 million over three years funds the Drone Innovation Hub itself, according to program documents on the Canada.ca website. The plan targets more than tripling Canadian defence-industry revenue, boosting exports by 50 percent, and creating 125,000 jobs by 2035. It sets a goal of awarding 70 percent of federal defence contracts to Canadian firms within a decade. Canada currently spends 2 percent of GDP on defence, with a target of 5 percent by 2035.
That is a large bet. And the government is making it at a moment when state-directed industrial strategy is deeply unfashionable in certain circles — the consensus for decades was that you bought American, you got interoperability for free, and you spent your procurement budget once. The Defence Industrial Strategy breaks that compact. "Canada's security depends on our ability to innovate at home," Industry Minister Melanie Joly said at the announcement, per CBC News.
The companies are paying attention. Dominion Dynamics, a Canadian defence startup led by Eliot Pence, a former international expansion executive at the U.S. defence company Anduril Industries, announced a $50 million investment to develop a sovereign Autonomous Collaborative Platform — a loyal wingman drone designed to fly alongside crewed fighters. The target for a full-scale prototype is 24 to 36 months from March 2026, per Army Recognition. "Canada shouldn't just buy that future from others. We should build it and we will build it," Pence said in a Dominion Dynamics press release.
Volatus Aerospace and Sentinel R&D signed a memorandum of understanding March 26 for a sovereign interceptor UAV platform. Philip Reece, CEO of InDro Robotics — one of Canada's most established commercial drone firms — told CBC News that Ukraine's battlefield has demonstrated what sovereign drone capability actually means in practice. Ukraine recently flew a drone with a 50-kilometre fibre optic spool, CBC News separately reported, a crude but effective counter to GPS jamming that illustrates how fast battlefield drone doctrine is evolving.
Canada joined the European Union's SAFE program as a partner nation in February, DroneXL reported, positioning itself inside a European framework for defence industrial cooperation rather than alongside it.
Derek Gowanlock, a project manager at the NRC, said the timing reflects two forces converging: the government's push for sovereign defence technology capabilities and the emergent battlefield requirements demonstrated by the war in Ukraine. "Those two big factors came together," Gowanlock said in coverage by DroneLife. The NRC's first autonomous helicopter flight was 2022, he noted — a small milestone that predates the current urgency.
The Bombardier Global 6500 — to be acquired for defence research — will be the first time Canada has had a Canadian-built aircraft to do flight research at home, Joly said, per CBC News. The aircraft has a published range exceeding 6,600 nautical miles per DroneXL.
There are reasons for skepticism. Industrial strategy is not the same as industrial output. Ukraine has 450 drone companies because it needed them immediately, under live fire, with a tolerance for iteration that peacetime procurement rarely permits. Canada's plan stretches over a decade. The Defence Industrial Strategy targets are projections, not data. Dominion Dynamics' $50 million is real money but a rounding error against the cost of designing, testing, certifying, and producing a loyal wingman aircraft that can operate alongside F-35s — a platform Canada has already purchased.
The $241 million IRAP stream will fund small and medium enterprises, but building a drone supply chain from scratch takes longer than a fiscal year. Since 2021, the NRC has delivered more than 975 joint projects with the Department of National Defence, per the Canadian Defence Review — a real track record, but one built largely in research mode, not production mode.
What Ottawa is actually betting on is not that C$900 million buys sovereignty immediately. It is buying the option to have it — a manufacturing base, a skilled workforce, a set of domestic vendors — before the next crisis. Whether that option gets exercised depends on whether the political will outlasts the news cycle, and whether the companies being seeded can actually build things that work.
The news cycles, for now, are on the government's side. The war in Ukraine is not ending on a schedule that lets defence ministers delay.
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Research completed — 12 sources registered. Canada NRC betting C$900M on sovereign drone manufacturing under Defence Industrial Strategy. Two-part story: (1) government policy bet — C$900M throu
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