The dynamics of the international order are evolving, with rising levels of Great Power competition and aggressorsincreasingly challenging NATO’s defences. These changes are making it increasingly important that the Canadian government prioritizes building up domestic defence capabilities to prove itself as a reliable NATO ally and contributor to collective security. In June 2025, NATO allies renewed their commitment to the alliance, setting a new target of 5% of GDP spending on defence by 2035. Weeks earlier, the Canadian government announced plans to meet the now-outdated 2% target by the end of the fiscal year, in March 2026. The renewed commitment also emphasizes cooperation on industrial defence, harnessing of emerging technologies, and innovation “to advance our collective security.” Placing a highlight on this element of P.M. Carney’s reaffirmed recommitment offers a pathway for the Canadian government to demonstrate its commitment to the alliance and make serious investments in Canada’s defence capabilities, while also bolstering the domestic economy.
Dual-use technologies are those which have both military and civilian applications, allowing corporations to sell their products to non-military clients. This significantly opens markets, allowing for more diverse streams of revenue. Manitty, a French company, represents a prime example. Beginning in the healthcare industry, specializing in AI-powered body sensors to advance smart and predictive diagnostic solutions, the company has also gained attention and financing from NATO innovation funding. Manitty’s path is one of the many examples of dual-use companies that the Canadian government can look to in adapting to domestic needs.
In addition to being beneficial for the producer, dual-use technologies have significant cost-saving advantages for governments because administrations would not have to secure more funds for initial R&D initiatives, instead leveraging existing capabilities and research in the private sector. Investing in dual-use capabilities will allow the Canadian government to incentivize private sector innovators, leveraging their existing expertise and building stronger civil-military cooperation.
A recent mapping exercise conducted by The Council of Canadian Innovators and The Icebreaker demonstrates the potential for this strategy in Canada, while also highlighting current barriers facing Canadian companies. The survey conducted over the summer identified almost 500 Canadian companies developing dual-use technologies with defence and non-defence applications. Notably, their findings also report that almost 90% of these companies saw procurement as important to their success. Despite this, half of them also indicated that access to clients, including the government, was one of their biggest obstacles. The Council of Canadian Innovators and The Icebreaker findings highlight that Canada is home to a diverse innovation community; however, these companies require better avenues to participate in government partnerships and procurement opportunities.
Empowering Canadian companies will require a multifaceted approach. Investment and partnership opportunities should exist at various stages throughout the product development lifecycle. There must be demand signals and government investment opportunities for companies in the early stages of R&D, as well as for those who have already developed a working product. Additionally, leveraging companies’ capabilities and ramping up Canada’s defence spending in a short timeframe will require greater agility in interactions with the private sector.
Currently, there are only two major funding programs for defence research offered by the federal government, Innovation for Defence Excellence and Security (IDEaS) and Mobilizing Insights in Defence and Security (MINDS). The IDEaS program aligns more closely with R&D funding, while MINDS focuses more on policy solutions. The Network for Strategic Analysis has highlighted weaknesses of the IDEaS program, which has had limited success since its creation in 2018. The Network for Strategic Analysis highlights that the program has historically focused on single-use military technologies, which have limited commercial applications, making it more challenging for companies to scale as potential clients are narrowly limited. Moving forward, the government should prioritize dual-use technologies, which would allow companies to scale to military and non-military clients.
On October 2, 2025, the Canadian government announced the creation of a new Defence Investment Agency. The new agency is intended to boost domestic defence supply chain capacity and streamline the defence procurement process, however, will only cover investments of $100M and above. This threshold means that the majority of procurement of emerging technologies and from small and medium-sized enterprises (SMEs) will likely fall outside the scope of the DIA. Already, hesitation has been expressed about this scope, as agile procurement is best-suited to smaller projects and would have been a beneficial opportunity to foster Canadian start-ups. The recently released “Defence Agile Procurement Insights and Analysis” report highlights a need for a cultural shift in how the Canadian government approached procurement, emphasizing “enabling interactive development, modular contracting, early industry engagement, and faster delivery cycles.
In addition to domestic pathways to foster dual-use technology R&D in Canada, the newly established Halifax, Nova Scotia, office of the NATO Defence Innovation Accelerator for the North Atlantic (DIANA) represents another opportunity for the Canadian government to demonstrate its commitment and contribution to NATO’s collective security.
DIANA was created to help maintain NATO’s technological edge, ensuring the alliance works in cooperation with the private sector to adopt and integrate emerging technology. One of its major initiatives is the Accelerator Program, which “equips start-ups with the skills and knowledge to navigate the world of defence, security and dual-use innovation.” Ensuring cohesiveness between DIANA’s requirements and priorities offers the Canadian government the opportunity This also offers the Canadian government the opportunity to better align its defence research and development investment paths with NATO’s and allow Canadian companies to benefit from the potential funding from both sources.
Security threats are rapidly evolving, and Canada is not immune to these dangers. The government cannot afford not to take real steps to foster a culture of investment, innovation, and partnership between corporations and defence agencies in Canada, leveraging existing talent and knowledge to strengthen domestic defence capabilities and reaffirm commitment to NATO’s collective security.
