The Spanish defense industry sits at the heart of the political debate in a landscape shaped by the accelerating military expenditure in Europe, allied pressure, and the technological revolution. The Ministry of Defense’s new industrial plans and the race for leadership among Spain’s major corporations lay bare the conjuncture facing the sector. Short-term decisions will determine whether this opportunity represents a true turning point for the industry or whether it translates into business as usual with greater budgetary availability.
At the same time, the lessons that can be drawn from current conflicts —with Ukraine serving as the real testing ground for an ongoing military transformation— impose an additional mandate: these decisions, aimed at shaping a competitive industrial fabric and a position within the European framework, must translate into real capabilities that contribute to Spain’s security. This element is essential to avoid a gap between investment, industry, and the capacities in question. From this emerges a triple alignment — between defense policy, industrial policy, and the technological base — which constitutes the main challenge of this public policy.
In this framework, it is useful to fix a few ideas.
- i) Spain faces a window of opportunity to reposition itself within the European defense industry, conditioned by the need to effectively coordinate defense policy, industrial policy, and business ecosystems.
- ii) The sector starts from a structure marked by corporate fragmentation and by the coexistence of large tractor companies with an extensive network of SMEs, which poses a dilemma between concentration and specialization. At this point, the territorial dimension and the distribution of industrial capacities have become relevant variables of this policy, with the dilemma between efficiency and competitiveness.
- iii) Technological change is transforming the armed conflict toward data-driven models, artificial intelligence (AI) and distributed architectures, with unmanned platforms operating in a coordinated fashion across multiple domains and the proliferation of long-range precision munitions, by mentioning only some of its most notable features.
- iv) European dependence on the U.S. for critical capabilities and military production limits the scope of strategic autonomy and forces a nuanced approach to political plans that suggest a rapid severance from the Atlantic relationship.
Can Spain turn European rearmament into real capabilities?
Consequently, the moment demands incorporating the lessons from ongoing conflicts and adapting industrial models to accelerated innovation and procurement procedures. This situation opens the door to new industrial actors and shifts part of the dynamism of the defense-industrial complex toward the civilian sphere, giving greater prominence to non-traditional technology companies and (potentially) lowering entry barriers in certain segments of the sector.
The increase in the European Union member states’ defense spending —where Spain remains below the average and below its economic weight— together with the mobilization of European financial instruments, has altered the role this sector plays in national economies. Europe (EU + United Kingdom, Norway, and, above all, Ukraine) concentrates a growing share of global arms imports and drives investment programs aimed at strengthening its industrial base. A process that does not respond solely to the war in Ukraine, but to a trend already underway of a deep reconfiguration of the European strategic environment.
At the same time, the technological revolution is redefining the sector’s scope, where AI, unmanned systems, cybersecurity, and space take on a structural position in military planning and in defining future capabilities; these technologies do not operate as mere enablers, but as elements that reshape how the use of force is conceived. Finally, this increased spending is accompanied by an explicit political will to reassess the fundamentals of defense policy.
“One of the problems that emerges is the acceleration of previous dynamics that do not always incorporate this diagnosis, with the risk of falling into the trap of inertia”
In this sense, the current moment differs from earlier cycles due to the convergence of factors that simultaneously affect demand, technology, and industrial organization. As a result, one of the problems that emerges is the acceleration of previous dynamics that do not always incorporate this diagnosis, with the risk of falling into the trap of inertia. Spain confronts this cycle from an industrial structure conditioned by persistent traits, marked by a pyramidal organization in which a small number of companies concentrates the main capabilities (Navantia, Santa Bárbara Sistemas, Airbus or — especially since the Government designated it as the potential national champion — Indra), while a broad network of small and medium-sized enterprises sustains the supply chain or specializes in specific niches (Oesía, GMV or ITP Aero). These tractor companies perform a function that goes beyond their productive dimension, as they enable Spanish participation in major international programs and facilitate access to foreign markets. Their role is especially relevant in a sector where scale and the capacity for integration condition access to contracts and participation in European consortia and programs, which have become a strategic, financial, and industrial lever.
Indra, pymes and territory: the industrial dilemma of Spanish defense
This configuration poses a complicated balance in industrial policy. The strategy oscillates between consolidating an actor with leadership capacity and preserving that diversified (and fragmented) ecosystem. The push for Indra as the backbone of a possible “national champion,” reinforced by corporate operations with broad media resonance recently and its role in strategic programs, would respond to that initial strategy of having a company capable of competing in the European arena. However, Indra itself has a technological specialization that made the option of giving so much weight to land platforms through the purchase —for the moment blocked— of EM&E Group questionable, not even under pressure to create that giant or without considering other established companies in the field.
While from the business fabric there is an inclination toward that second strategy, as shown by the results of the REPENFAS R&D project, various actors consider it more viable to position themselves as technological providers in specific segments of the value chain rather than competing as full system integrators. This logic translates into a preference to operate as tier 2 — firms that supply subsystems or specialized components — rather than tier 1 — firms that integrate full platforms and manage large programs. This position does not reduce their relevance, but redefines it by placing them as critical providers of technological capabilities. Moreover, reliance on large programs can introduce rigidity in industrial planning, limiting the ability to adapt to rapid technological changes.
This balance is even more complicated when we consider that: first, the weight of foreign capital in the Spanish industry is high and could intensify in the current context of European concentration, where large groups seek to expand their presence; second, investment in research and development remains limited in relative terms, which conditions the capacity to generate own technologies; and third, there is a social and political perception of defense as divided and increasingly polarized, which influences the debate on higher spending.
“The localization of industrial capabilities and technological projects has economic, social, and political implications”
To this complexity we must add the territorial dimension. The localization of industrial capabilities and technological projects has economic, social, and political implications to the extent that it affects employment, regional specialization, and the distribution of public resources. Some analyses interpret the recent shifts in Indra’s direction as an opportunistic attempt to articulate a link between Catalonia and Madrid that complements or surpasses the current industrial corridors.
Indeed, public policy has incorporated the territorial dimension by promoting industrial corridors and the geographic distribution of defense projects, adding tension between productive efficiency and territorial cohesion. For example, at the end of March, the ministries of Defense, Industry, and Science, Innovation and Universities formalized an agreement — aligned in principle with the Industrial and Technological Plan for Security and Defense — aimed at strengthening the training ecosystem to boost sector growth, its employment-generating capacity, and its positioning in Europe, seeking to create opportunities across all autonomous communities, in synthesis of government statements. These assertions again highlight how job creation and territorial cohesion are relevant objectives in themselves within defense policy and, consequently, must be incorporated into industrial calculations.
In parallel, the Strategy for Technology and Innovation for Defense (ETID 2026) has also been recently presented, which would seek to direct investment toward technologies and acquisition processes with an impact on operational and military innovation. If realized, these measures would aim to increase corporate participation and strengthen the synergies between the defense sector and the civilian technological ecosystem; explicitly support is provided to the different phases of these processes —from initial research to operational integration. This intention would thus be reflected in the expansion of the value chain.
“These strategic-operational changes shift the focus from the individual technological superiority of large platforms toward the ability to generate volume, sustain the pace of warfare, and assume replacement costs”
This evolution is intended to align with a broader shift in how wars are fought. Areas such as sensors, communications, and data analysis have taken on a critical weight, enabling the potential entry of civil-sector companies through dual-use technologies. Cybersecurity, counter-drone systems, or capabilities that enable the integration of information, communications and command and control systems are at the center of the sector’s transformation. Indeed, the expansion of drone technology introduces a transversal transformation of the battlefield across air, land, and sea domains, by enabling the combination of volume, persistence, and relatively low cost to generate operational effects. The proliferation of drones and missiles also points to dynamics typical of a paradigm of “salvo warfare,” characterized by simultaneous or sequential launches of precision munitions with the aim of saturating defenses, as my colleague Guillermo Pulido has theorized. These strategic-operational changes shift the focus from the single technological superiority of large platforms toward the ability to generate volume, sustain the pace of military use, and bear replacement costs, altering the traditional relationship between quality, quantity, and military effect. Moreover, this phenomenon also changes the logic of deterrence and the offensive-defensive calculus.
In this context, a tension emerges between two industrial models. On the one hand, a model based on those large platforms and long development cycles. On the other, a model characterized by speed, iteration, and continuous adaptation. In the latter, innovation happens in short cycles, with rapid testing and validation processes that contrast with traditional procurement timelines. A contrast that challenges the industry and contracting systems, because procedures designed for long-term projects struggle to incorporate evolving technologies. Hence the need to relax processes and shorten development times.
In Europe, this process unfolds under a structural dependence on the U.S. for critical capabilities and, in general, for military equipment, as Mejino-López and Wolff have shown. Air defense systems, missiles, C4ISR, as well as related components depend heavily on American suppliers; Ukraine highlights Europe’s vulnerability in this regard. This dependence conditions any attempt to develop European strategic autonomy, which should be understood in more limited terms today: not as full independence, but as the ability to decide and maneuver within a relationship that is structurally (inter)dependent.
In this scenario, the defense industry is configured as an instrument of defense policy inextricably aligned with the armed forces, which also affects the productive structure, innovation, and the country’s international positioning. Its development will depend on the ability to translate investment into operational capabilities, to integrate new technology players, and to adjust industrial decisions to the demands of the strategic environment. All told, the most important question does not lie in the volume of spending, but in the ability to steer that effort toward concrete results. Ultimately, the defense industry could play a significant role if it is approached as a strategic policy that coherently articulates the security-defense binomial, with technology and strategic thinking.
