Ottawa commits CAD $900m to boost defence innovation

Canada has earmarked more than CAD $900 million in new National Research Council (NRC) funding for defence and dual-use research, spanning drones, aerospace test platforms, quantum technologies and biomedical countermeasures.

The investment falls under Canada's Defence Industrial Strategy, a long-term framework linking defence procurement and research spending to domestic industrial development. Ministers presented the funding on Monday as part of a broader push across government and the armed forces to expand sovereign industrial capacity and strengthen supply chains.

The NRC will build on existing work with the Department of National Defence and Canadian industry.

Defence is the Council's largest client relationship. Since 2021, the NRC has delivered more than 975 joint projects with Defence in areas including aerospace, sensors, marine systems and biosecurity.

Aerospace focus

More than CAD $500 million will support aerospace and autonomous-systems work. The NRC plans to acquire a Canadian-built Bombardier Global 6500 aircraft for defence-related technology development, using it as a research platform with industry and academic partners.

The program also includes a Drone Innovation Hub, with sites in Ottawa and in the Mirabel area. The hub is intended to expand research and development in drone and counter-drone technologies and to provide facilities for testing and qualifying new systems.

The hub will serve defence, security and dual-use sectors. Work is expected to cover both drone development and counter-drone approaches, reflecting growing interest among militaries and public-safety agencies in managing unmanned threats.

Support for SMEs

Another strand targets smaller firms developing technologies for both civilian and military markets. A new Defence Industry Assist stream has launched within the NRC's Industrial Research Assistance Program.

Defence Industry Assist will provide CAD $241 million in funding and advisory support for Canadian small and medium-sized enterprises. The stream targets "high-potential, innovative Canadian SMEs" working on made-in-Canada defence and dual-use technologies.

Industrial Research Assistance Program staff work with close to 10,000 SMEs each year. The NRC expects the new stream to help move more projects from early development into scalable manufacturing and procurement pathways.

Quantum and biosecurity

The package allocates more than CAD $161 million over five years to quantum technologies for defence and security applications, covering quantum sensing, quantum internetworking and quantum-safe communications.

Planned initiatives include measurement-science work tied to standards and interoperability with defence partners and NATO allies. Other activities include upgrades to the NRC's semiconductor fabrication facilities for quantum-related production and scale-up, and benchmarking quantum platforms to support technical assessments of Canadian companies' technologies.

The quantum agenda also expands the Quantum Sensors Challenge program, with a focus on defence applications, including navigation in GPS-denied environments and surveillance or reconnaissance. In addition, a Quantum Safe Technologies Initiative will support post-quantum cryptography and analysis of cryptographic systems.

Alongside quantum, the NRC is committing CAD $28 million to biomedical countermeasures focused on responding to biological threats, high-consequence pathogens, and pandemics that affect national health security.

A Biomedical Countermeasures Initiative will support biologics development and the manufacturing of diagnostics, vaccines and therapeutics against defence-priority biothreats. The NRC described the move as a way to bolster sovereign capacity, highlighted during the COVID-19 pandemic.

Wider defence goals

Government figures tied the Defence Industrial Strategy to broader defence-spending targets. Initial investments under the strategy contribute to Canada's stated aim of spending two per cent of gross domestic product on defence in 2025-2026. Canada has also outlined a pathway toward meeting a new NATO Defence Investment Pledge to invest five per cent of GDP by 2035.

According to the government, the Canadian defence industry contributes nearly CAD $10 billion to GDP and supports more than 81,000 jobs. Ministers argued that the new research and industrial programs would improve the sector's long-term growth prospects while supporting national security objectives.