On May 28, Ontario announced a Framework for its Defence Industrial Strategy. The strategy aims to leverage the province’s manufacturing base, technology sector, and skilled workforce to attract more defence firms and adjacent businesses.
The province is prepared to deploy public funding and remove regulatory hurdles in hopes that defence-sector growth will generate up to 43,000 new jobs by 2035 and contribute $6 billion to the provincial economy.
What We Know About Ontario's Framework
The four pillars of Ontario’s defence economy
The Ontario Defence Industrial Strategy is anchored by four pillars:
- Strengthen the Industrial Base: Securing a larger share of rising federal and allied defence spending by supporting prime contractors and SMEs and expanding industrial capacity.[1]
- Own Tomorrow’s Frontier: Commercializing Ontario’s growing sectors and research strengths in artificial intelligence, quantum computing, cybersecurity, uncrewed systems, and other dual-use applications into defence sector opportunities.
- Expand Export Reach: Leveraging diplomatic and economic tools to position Ontario-based companies as suppliers to other NATO governments and allied defence supply chains.
- Build an Integrated Supply Chain: Leveraging Ontario’s critical minerals, nuclear, advanced manufacturing, processing, and logistics strengths into the defence product supply chain, including through its $500 million Critical Minerals Processing Fund and access roads to the Ring of Fire.[2]
Leaning Into Existing Strengths and Provincial Programs
To advance defence sector growth, Ontario:
- has established the Office of the Ontario Military Defence Representative
- will dedicate government staff to connect prime contractors with Ontario suppliers and
- will lean on Invest Ontario to attract large-scale dual-use projects
Companies in, or adjacent to, the defence sector may be able to access funding and programming support through existing provincial schemes, such as:
- The $500 million Critical Minerals Processing Fund and the $25 million committed to date through the Critical Minerals Innovation Fund, which will support projects that build on Ontario's critical minerals strengths for defence purposes.
- workforce and skills-development programs, including skills-training funding, the Ontario Job Grant, apprenticeship supports and the province’s broader investment in additional seats in high-demand programs such as STEM and skilled trades.
- innovation and commercialization support, including the Critical Technologies Initiative, IPON, the Ontario Research Fund, and $50 million in funding through Venture Ontario to support early-stage defence startups moving from research and development to commercial sales.
What Remains to Be Seen About Ontario's Framework
What regulatory flexibility will be offered to defence firms?
Special Economic Zones are identified as a tool that could allow the government to relax or suspend certain provincial and municipal regulations for proponents of high-impact projects and will be used as a policy tool to further the Defence Industrial Strategy.[3] Exactly when and how such Special Economic Zoning would be available has not yet been announced.
Will new government money be made available?
The Framework does not create a new dedicated defence funding envelope, but it does signal a willingness to make existing provincial loan and grant programs available.[4]
For example, the Ontario Together Trade Fund - a new funding vehicle that provides grants or loans in the range of 10-20% of eligible costs, up to a maximum of $5 million, to small and medium enterprises operating in Ontario. Originally launched exclusively for businesses targeted by U.S. tariffs (i.e., steel, automotive, aluminum), query whether existing funding programs such as this may be used to bolster small and medium-sized businesses working in Canada’s defence sector or projects that improve trade diversity and trade security.
Will Ontario Be Home to the New Defence, Security and Resilience Bank?
Canada has been selected to be the host country of the proposed Defence, Security and Resilience Bank (DSRB) - a new multilateral bank owned exclusively by nation-states that will focus on financing defence production and security projects.
While the ultimate home of the new bank remains to be selected by the federal government, the Ontario Premier has attended multiple high-profile events in recent months to bring together Toronto’s political leadership and stakeholders from finance, manufacturing, research, defence, and academia to promote Toronto as the bank’s headquarters.[5]
Expect More to Follow
Ontario’s strategy reflects the federal government’s Defence Industrial Strategy, the most sweeping change in defence policy since World War II, which aims to establish sovereign defence capability and industrial capacity, and domestic supply chain resiliency.[6]
Ontario is expected to engage in active consultations with municipalities, academia, and industry stakeholders later this year, which will provide a valuable opportunity for companies to share their perspectives on how the province can best support the sector.
Fasken’s National Security and Defence Group will continue to monitor these developments as governments introduce new defence-industrial policies, funding programs and procurement initiatives that may create opportunities for businesses operating in, or adjacent to, the defence sector.
[1] The Framework notes that Ontario is home to over 300 companies generating more than $5 billion in annual revenue and directly employing more than 13,000 people. Sectors including armoured vehicles, aerospace, and shipbuilding are among the province’s existing industry strengths. The province plans to leverage existing investments, such as its $215 million investment in shipbuilding, and lean on its investment attraction agency, Invest Ontario, which assists companies investing in the province with site selection, market intelligence, financing, labour force needs, and access to government services
[2] Ontario Government, “Ontario Launches $500 Million Critical Minerals Processing Fund”, (December 12, 2025); Ontario Government, “Ontario Breaks Ground on Roadways at the Gateway to the Ring of Fire”. (June 2, 2026); Ontario Government, “Ontario Completes Major Milestone on G7’s First Small Modular Reactor” (April 30, 2026); Ontario Government, “Ontario Investing $215 Million to Support Provincial Shipbuilding Sector” (June 25, 2025).
[3] The Ontario Legislature passed the Special Economic Zones Act in 2025, giving cabinet the regulatory authority to designate special economic zones in which designated proponents or projects can be exempted from certain legal and regulatory requirements. On satisfying certain criteria, the Minister of Economic Development, Job Creation and Trade may designate a project or class of projects as “Designated Projects,” or a qualified person or class of persons as “Trusted Proponents”. Through regulation, the government can allow a Trusted Proponent and Designated Project to effectively bypass any requirement under any provision of an Ontario statute, regulation, or other instrument (including a municipal bylaw).
[4] Ontario’s Framework document commits to making funding available to defence-related industries through the Advanced Manufacturing and Innovation Competitiveness (AMIC) fund and the Ontario Together Trade Fund (OTTF).
[5] Government of Ontario, “Team Ontario United Behind Toronto’s Bid to Host the Defence, Security and Resilience Bank” (May 12, 2026).
[6] Government of Canada “Canada’s Defence Strategy” (2026).
