Why Lithuania is a future strategic hub for defence investment?

As a NATO member on the alliance’s eastern flank, the defence industry of Lithuania has become a national priority with substantial government backing and strategic importance. This focused approach has created significant opportunities for international collaboration and investment in the country’s rapidly evolving defence sector.

Strategic location and NATO role

Lithuania’s geographical position makes it a key player in European defence cooperation. Strategically positioned within the European Union and on NATO’s eastern border, the country provides secure access to crucial European markets while serving as a stable gateway for defence operations across the continent.

The country currently hosts over 2,500 Allied soldiers deployed on rotation basis, including NATO Enhanced Forward Presence forces, NATO Force Integration Units, U.S. rotational battalions, and a German brigade planned for full deployment by 2027. This military presence, combined with regular international exercises, highlights Lithuania’s commitment to collective security.

Government support and investment incentives

Lithuania’s defence industry benefits from streamlined processes designed to accelerate investment and development. Recent legal provisions, titled the Green Corridor, have simplified territorial planning, land procurement, and construction procedures for large-scale investment projects, shortening the setup period for manufacturing facilities from two years to just six months.
The Green Corridor initiative also offers attractive fiscal policies for companies considering military industry investment in Lithuania, including a 0% corporate income tax rate for 20 years. Additionally, companies in Lithuania benefit from efficient export procedures, with export licenses typically processed in 25 work days or less.

Defence funding and support programs

Lithuania has demonstrated its commitment to defence sector investment through substantial funding initiatives. In 2024, over 45% of the National Defence Budget – nearly €1 billion – was dedicated to modernizing the Lithuanian Armed Forces, with approximately €200 million reserved for drone procurement over the next six years.
The recently launched €300 million “Vytis” initiative aims to strengthen the defence industry in Lithuania by promoting innovation and boosting global competitiveness. Led by the Ministry of the Economy and Innovation, this program addresses key industry challenges including limited early-stage funding and regulatory barriers. With targets to triple defence exports and generate over €1 billion in sector value by 2030, “Vytis” provides comprehensive support from R&D through market entry, creating significant opportunities for companies developing battle-ready innovations.

Complementing this is ScaleWolf, a first-of-its-kind venture capital fund and allied technology accelerator focused on dual-use technologies. With €13.5 million in funding, this initiative accelerates advancements in Baltic defence innovation technologies, supporting companies developing solutions aligned with NATO’s emerging and disruptive technologies priorities.

Growing industry landscape and partnerships

Nearly 100 companies currently operate in Lithuania’s security sector – a number that has grown by 18% over the past three years. These firms include a number of innovative defence startups and produce a diverse range of products, services, and components, leveraging the country’s strong research base and close ties with international partners.

Strategic partnerships are forming between international and local companies, such as the recent memorandum of understanding between German drone developer Quantum Systems and Lithuania’s Aktyvus Photonics, combining cutting-edge laser technology with AI-powered drone platforms.

The Baltic Miltech Summit further promotes defence sector partnerships in Lithuania by providing a platform for industry leaders, NATO and EU policymakers, and research institutions to explore the development of cutting-edge military technologies.

With its NATO commitments, government backing, and focused innovation programs, Lithuania has positioned itself as a strategic partner for defence companies seeking growth opportunities in Europe. Investing in Lithuania’s defence sector means accessing both established expertise and an ecosystem designed for rapid advancement in this critical industry.