Bosnia and Herzegovina plans two new arms factories as defense output doubles

Defense companies more than double revenue

Bosnia and Herzegovina is preparing to expand its defense manufacturing base with two new military-equipment factories, following a sharp increase in production by the sector’s leading companies. Officials from the government of the Federation of Bosnia and Herzegovina presented the expansion as both an industrial policy measure and an investment in the country’s security capacity.

According to Federation Energy, Mining and Industry Minister Vedran Lakić, the value of domestic defense production has more than doubled over the past three years. Revenue at six key defense companies in the Federation rose from 270 million convertible marks (€138 million) in 2022 to 554 million marks (€283 million) in 2025, Lakić said at an arms and military-equipment exhibition in Sarajevo.

The figures represent an increase of 284 million marks over the period. They also indicate that the sector is moving beyond incremental growth: the six companies generated slightly more than twice their 2022 revenue in 2025. No company-level breakdown, production-volume data or export figures were provided.

New plants planned in two locations

Lakić said two military-equipment factories would open soon, with one located in Una-Sana Canton and the other in Tuzla. Index.hr reported no investment values, commissioning dates, ownership details or planned production capacities for the projects. It also remains unclear which categories of equipment the two facilities will manufacture.

Federation Prime Minister Nermin Nikšić said investment in the defense industry would continue because the sector had economic as well as strategic importance. He described defense manufacturing as part of the Federation’s security, industrial and development policy, arguing that domestic capability and stable partnerships support peace rather than encourage conflict.

Denis Bećirović, chairman of the Presidency of Bosnia and Herzegovina, similarly linked stronger domestic defense capacity to the deterioration in the security environment. He also said the country should move closer to NATO membership.

Drones and a NATO-standard rifle

The expansion plans were presented during the First Balkan Shield 2026 exhibition in Sarajevo. Alongside Bosnian manufacturers, companies from Slovenia, China, Turkey and Egypt displayed products at the event. The domestic exhibits included several types of weapons, mainly intended for infantry, as well as drones that Bosnia and Herzegovina plans to manufacture on a larger scale.

Sarajevo-based Center for Advanced Technologies has developed four drone models. Its largest aircraft has a wingspan of 5.4 meters and can carry a payload of up to 30 kilograms. The source did not disclose planned annual output, production costs, customers or a timetable for moving to mass production.

AC Unity, a company based in Goražde, also presented a new assault rifle manufactured to NATO standards. The weapon is currently being tested under different conditions. No date was given for completion of testing or the start of commercial production.

Capacity growth precedes new market push

The combination of higher revenue, additional factories and new products shows that Bosnia and Herzegovina is seeking a broader role in the international defense market. The involvement of companies from four foreign countries at the Sarajevo exhibition also gives domestic producers a venue to assess competing products and potential commercial partnerships.

For manufacturers and investors, the next measurable milestones will be the opening of the two plants, the transition of drone projects into larger-scale production and the completion of rifle testing. Export destinations, order books and factory capacities will determine whether the recent revenue increase can be sustained. Until those details are disclosed, the clearest evidence of expansion remains the rise in the six companies’ combined revenue from 270 million to 554 million convertible marks.