Despite recent battlefield setbacks in Ukraine, Russia is rebuilding its military-industrial complex by blending Soviet-era capacities with modern warfare demands, challenging western assumptions about its resilience and adaptability. Rather than merely replenishing lost equipment, Moscow is restructuring its defence industry to focus on asymmetric advantages revealed during the conflict, notably drones, compact electronic warfare systems, and other scalable, low-cost technologies.
Russia’s defence sector now operates under a hybrid state-market model. This system combines the Soviet legacy of large-scale industrial mobilisation with elements of market competition, enabling rapid scaling of select weapons production. Since 2022, satellite imagery has revealed ongoing construction and expansion at key production facilities linked to state-owned conglomerates such as Kalashnikov and Almaz-Antey.
A significant aspect of this evolution is the incorporation of private companies, start-ups, and decentralised innovation efforts within the broader defence framework. Initiatives like Ushkunyk (or Ushkynuk/Ushkuniak in various reports), a technology accelerator, connect technical volunteers and domestic start-ups with major defence contractors and the Russian state acquisition apparatus. This arrangement facilitates rapid response to frontline needs and aids in circumnavigating western sanctions. Private firms and intermediary networks reportedly use shell companies, third-country distributors, and e-commerce platforms such as Alibaba to secure dual-use Western components despite export controls.
Legacy Soviet defence enterprises have demonstrated notable adaptability, shifting focus towards unmanned systems, artificial intelligence-enhanced targeting, and autonomous technologies. For example, Kalashnikov’s collaboration with grassroots projects like Ushkunyk and Project Archangel illustrates how wartime innovation is being integrated into established state defence companies. The Geran long-range drones, initially based on a propeller-driven Iranian design, now include jet-powered variants and more advanced versions utilizing mesh network communication to enable coordinated drone operations.
Electronic warfare capabilities have similarly transformed. Russia has moved away from relying solely on large, strategic systems to deploying thousands of compact counter-drone devices designed to jam communications and disrupt navigation. This shift has contributed to a dramatic increase in drone production: Russia plans to produce approximately 7 million first-person view drones in 2026 and reportedly delivered between 130,000 and 150,000 low-cost electronic warfare systems in 2025. Monthly output of Geran drones reportedly far exceeds the current deployment of comparable U.S. systems such as the Lucas loitering munition, itself a reverse-engineered Iranian design.
The ongoing conflict has established a direct feedback loop between frontline operations and industrial production, accelerating testing and refinement of new systems. This process has also generated international attention, leading to arms export deals and commercial agreements such as Kalashnikov’s 2026 contract to supply civilian UAVs to an Indian partner.
Russia currently maintains a force of roughly 700,000 troops engaged in Ukraine. Its evolving defence-industrial base, maintained on a wartime footing, could potentially allow Moscow to replenish and expand its military assets more rapidly than many Western countries. This development presents a strategic challenge for NATO, as Russia could leverage attrition warfare combined with extensive drone deployments and electronic warfare to offset Western technological advantages. While Russia has accumulated significant battlefield experience adapting to Western tactics, NATO has had comparatively fewer opportunities to develop equivalent countermeasures, highlighting a growing capability gap that some experts argue must be addressed.