NATO-caliber ammunition made in Ukraine: What’s holding back production

Oboronka reports on the issue.

Ukraine’s defense industry has managed to revive Soviet-era shell production, but launching new calibers, never before produced in the country, is a much tougher challenge.

Years of intense warfare have already led to a shortage of NATO-standard shells, especially the large 155mm ones. Producing them is considered top-tier in the global arms industry.

Western supplies partly cover the gap. But for Ukraine, being self-reliant in such critical ammunition is about survival. Since 2024, efforts have begun to launch domestic production of 155mm shells.

According to Oboronka, Ukraine’s military couldn’t meet the Defense Ministry’s demand for 155mm shells last year. U.S. deliveries are uncertain, and Europe’s capacity is limited. That’s why Ukraine is now betting more heavily on its own production.

Arsen Zhumadilov, head of the Defense Procurement Agency, said several hundred thousand NATO-standard shells made in Ukraine have already been contracted.

But many shells remain uncontracted, despite available production capacity.

Ukrainian Armor launched one of the country’s biggest NATO shell production projects, starting on five types at once: three versions of 155mm, 105mm, and 120mm tank shells. Their partner: the European Czechoslovak Group.

The deal was officially signed in October. By December 2024, military officials confirmed the production was possible. Ukrainian Armor said it was ready to manufacture 100,000 shells in 2025 and 300,000 in 2026.

But mass production never started. The government only funded the part of the project that involved Czech imports, leaving domestic manufacturing without support.

Ukrainian Armor director Vladyslav Belbas explained that the target of 100,000 shells in 2025 was based on having gunpowder. To meet that goal, powder had to be ordered from partner factories early in the year. Now, with over six months lost, it’s much harder to catch up.

So, a project that aimed to produce hundreds of thousands of shells in Ukraine and keep factories running for years is now scaled down to tens of thousands of imported rounds.

“We don’t expect any Ukrainian-made shells from this project this year,” Arsen Zhumadilov told Oboronka.

Why does the state find money for imports but leave domestic manufacturers idle until next year?

The issue lies in regulation. The procurement system offers no tools to prioritize domestic producers, and in some cases, it can even penalize officials for doing so.

"There are no rules that let us prefer local manufacturers in procurement. If a domestic producer offers something for 1,000 euros per unit, and an importer offers the same for 950, we’re forced to go with the cheaper import, even if the local company pays taxes here," Zhumadilov said.

He pointed out that the key factor in selecting suppliers for the Defense Procurement Agency is still price. Even if the cheapest offer comes from a foreign middleman with a shady background, the agency might deny an advance and insist on post-payment, but the law doesn’t allow them to reject the offer outright in favor of a more reliable local supplier at a slightly higher price.

"If we choose the more expensive option, law enforcement will come after us, calculate the difference, multiply it by the number of units, and accuse me of causing budget losses," Zhumadilov added.

In December, Resolution No. 1504 “Weapons of Victory” was adopted. It aimed to create a list of weapon models with a high share of Ukrainian-made components. State buyers were expected to “take this list into account” during procurement. But in the six months since, not a single contract has been signed under the resolution. According to Zhumadilov, it still doesn’t give clear instructions on how to favor local manufacturers. Whether that means pricing benefits or direct priority for listed companies remains undefined, so buyers stick to the usual rules and avoid risks.

"Our buyers assumed too soon that we live in a buyer’s market. The arms market is a seller’s market! If you’ve got your own production, you’re in the game. If not — get in line and hope you make it," said a government source connected to the arms industry, speaking to Oboronka.