"It is important that this does not become a 'club for the in-laws'." Are Ukrainian drone manufacturers ready to join Defense City: 5 confessions from the creators of the Vyriy, Sirko, General Chereshnya, Murakh and VB140 Flamingo drones

Dmytro Babaenko, co-founder of Vyriy

Defence City — so far it looks interesting. Yes, it has its pros and cons, but the legally approved opportunity to reinvest funds in production and job creation, especially in difficult wartime, is always good. But how all this will work in practice and how long it will take to eliminate possible shortcomings is still unknown. It is also unknown whether, for example, this platform will duplicate the Diya City, which works, is understandable and quite convenient for most companies.

On the other hand, Defence City is, so to speak, the beginning of a possible export story for Ukrainian companies. This, in turn, will provide an opportunity to attract investors and new donors, which will allow purchasing Ukrainian weapons for the Ukrainian Defense Forces in Ukraine. So the system is a bit controversial, there are pros and cons, but it is possible to give specific assessments only when it starts to work fully.

CDBS, drone manufacturer «General Chereshnya»

We support the package of draft laws from Defence City and advocate for the creation of transparent conditions for the development and operation of defense industrial complex (DIC) enterprises in Ukraine. We fully support the provisions of the draft laws relating to the protection of information about DIC enterprises, the provision of tax benefits, the simplification of customs procedures, the simplification of export control, and support for the relocation of enterprises.

As part of the Technological Forces of Ukraine association, General Chereshnya actively participates in working groups and meetings within the framework of the preparation of a package of draft laws on Defence City. During this interaction, we proposed to supplement the package of draft laws with provisions that establish additional security guarantees for defense industry enterprises in the part related to restricting access to information about defense industry enterprises in open registers.

We believe that the Defence city legal regime is necessary, as it will create additional opportunities for Ukrainian enterprises to further increase Ukraine’s defense capabilities under martial law, as well as to attract investment and develop export potential.

Regarding the initiative to decriminalize violations during defense procurement, we support the idea of ​​legal protection for defense contractors. As of today, many law enforcement agencies can interfere in the work of miltech companies. Given the importance of defense procurement and the increased risk of enemy fire, defense companies should have increased immunity in criminal proceedings.

Ihor Krynychko, Chairman of the Supervisory Board of the drone development company SkyAssist, which launched the Ukrainian reconnaissance drone «Sirko» into mass production

There is not enough information to make a decision about joining Defence City. Currently, defense component manufacturers are primarily thinking about how to enter a conditional Defence City somewhere in Norway, Denmark, or Finland. In countries where the rules of the game are clear, everything is transparent. Unfortunately, there is no time to wait for Ukraine to write out some privileges and rules. Currently, Defence City looks like an attempt to motivate manufacturers not to move production outside Ukraine, but to keep manufacturers here.

Do you know when the defense industry actually boomed? In 2022, when the state did not interfere in the work at all. Then a bunch of ideas emerged from all the garages and basements that helped to survive. Whenever the state starts to regulate something, there is a fear that everything will be so regulated that manufacturers will no longer be interested in any «good» state initiatives. Especially not in any new ideas and developments. In order to achieve the goal of providing domestic defense manufacturers with the most loyal conditions, the authorities should first of all significantly reduce the tax pressure on defense employers and provide weapons manufacturers with data protection at the state level so that the enemy cannot calculate either people or locations that work for the defense of Ukraine. Now it seems that we are trading cigarettes. The rules are the same for both tobacco and defense manufacturers. Is this strategically correct for a country that is waging a war for survival?

Also, for arms manufacturers, it is necessary to ensure the right to invest in development. Companies are constantly experimenting, creating R&D departments. Therefore, it is important to give them the right to use profits for development. Quite provocative in the draft law on Defence City is the provision on decriminalization of violations during the implementation of state defense orders. This is nonsense. There must be responsibility, but the presumption of innocence must also be taken into account.

I am ready to join Defence City when the rules are explained in detail and the benefits are guaranteed at the legislative level. It is important that joining the regime does not turn into a bureaucratic quest of certificates and checks, and does not become a marathon of attempts, as is the case with the opening of arms exports for Ukrainian manufacturers.

Igor Chaykivsky, founder of the company «Robotic Complexes»

We consider the Defence City package of draft laws, which the Verkhovna Rada is preparing to consider in the near future, to be very necessary for domestic defense industry manufacturers and fully support it. In particular, a special taxation regime is needed, as weapons manufacturers already have certain restrictions on the profitability of the products they produce.

In addition, the changes should significantly reduce the level of corruption. They will «untie» the hands of business, since the scaling of such projects directly depends on the speed of profits received by these same enterprises.

Since the state is usually less efficient in running a business than private entrepreneurs, it is worth understanding that even if the money remains in the private sector, it still ends up in the budget through taxes — and is ultimately used, in particular, to purchase weapons. Thanks to the new bills, it will be possible to avoid a whole chain of bureaucratic processes, and the funds will be absorbed by businesses faster.

We support the initiative of the Ministry of Defense of Ukraine to create Defence City and will definitely join this cluster if we meet all the parameters of the ministry. All points are acceptable to us. However, we have questions regarding permits for the export of domestic defense products.

I am sure that this is a very sensitive topic at the moment. And until the domestic market is saturated with a sufficient number of domestically produced weapons from Ukrainian manufacturers and there are enough people in our country who understand the needs of the Defense Forces in these weapons, I would consider it necessary to bypass the issue of exports.

«Vinnytsia Bees», developer of the VB140 Flamingo interceptor wing

Yes, a preferential special regime for defense manufacturers is desperately needed. Since 2022, a new industry — military tech — has begun to form in Ukraine, virtually from scratch. People from IT, hardware, and manufacturing have joined it — those who began creating products during a full-scale war. And now these businesses are faced with excessive bureaucracy, complex procedures at customs and banks, tax pressure, and an unadapted legal framework. A regime like Defence City is a way not to «privilege» anyone, but to bring the industry out of the shadows and create a working, adapted field for innovation and production. ʼ

Yes, we support the very idea of ​​creating a special regime that could become for military tech what Diya.City became for IT. This could really provide a systemic basis for transparent work, simplify investment attraction, and improve interaction with the state.

But it is important that the initiative does not turn into an imitation of support — that is, that the regime is not overly regulated, ineffective, or discriminatory towards small companies.

Acceptable items:

• A basic check instead of endless checks is a sound solution that will save time for companies and the state.

• Employee reservations are critical to maintaining teams and development continuity.

• Tax simplification is a logical step that will allow the industry to be supported not with grants, but with mechanics.

• Publicity of registers and open reporting: in wartime this can be a security risk for people and objects. Protection of resident data, or even complete closure of some elements, is required.

Questions arise:

• The uncertainty of the criteria for access to the regime is important so that it does not become a «club for the in-laws.»

• Potential duplication of functions with existing structures (such as BrayOne, Action.City) — bureaucratic layering must be avoided.

We are ready to become a resident provided that:

• the regime will be really working, not declarative;

• the mechanisms will be simple, transparent and accessible to companies that are truly engaged in R&D and production;

• Issues related to security, currency transactions, customs, and government contracts will be closed;

• A simplified tax environment will be ensured.

We view Defence City not as a «privilege», but as infrastructure for the development of an industry that fights no less than the army. If the conditions are adequate, we will be among the first in line.