Poland will invest PLN2.6bn ($665mn) to increase its domestic ammunition output, the government announced on July 2, as it seeks to strengthen national defence capabilities and support Ukraine's military needs, Reuters reports.

Polish Prime Minister Donald Tusk said the funds would be channelled to state-owned Polish Armaments Group (PGZ) companies, marking a major step in the country’s drive to ramp up production capacity. "This is about the independence and security of Poland and the entire region," Tusk said.

The investment, which includes support from the European Union’s ASAP programme and the European Investment Bank (EIB), will help expand manufacturing with plans to produce up to 1mn rounds annually of various ammunition types and artillery shells. “It is our ambition to produce up to one million units of ammunition annually within a few years,” Tusk stated.

Separately, Poland signed a contract to acquire 180 K2 tanks from South Korea and 80 accompanying vehicles, Defence Minister Wladyslaw Kosiniak-Kamysz announced on July 2.

Poland is one of the few Nato members that already spends almost 5% of GDP on defence as it pursues a policy to build the largest conventional army in Europe.

Poland’s defence industry is undergoing significant expansion, driven by heightened regional security concerns and increased government spending on defence. In response to Russia’s invasion of Ukraine and broader Nato commitments, Warsaw has sharply accelerated investment in defence production and modernisation in the last few years.

The state-owned PGZ, which dominates the sector, is receiving record levels of funding. This follows earlier agreements for joint production with foreign partners including South Korea’s Hyundai Rotem and the United States' Lockheed Martin.

Polish firms are focusing on expanding capabilities in artillery, armoured vehicles, air defence systems and munitions. Export potential is also growing, particularly to Ukraine and Nato allies seeking to replenish depleted stockpiles.

While infrastructure and production bottlenecks remain a challenge, the industry’s rapid scaling and growing integration into the European defence supply chain have positioned Poland as a rising hub for arms manufacturing in the region.

Kosiniak-Kamysz highlighted the urgency of the artillery programme, given the growing demands of regional security. "The task for the Polish arms industry is clear. We are talking about the production of ammunition in large quantities, in key calibres, both for the needs of the Polish army and our allies, including Ukraine," he said.

Kosiniak-Kamysz added that the investment would finance “more than 50 projects in 12 companies of the Polish Armaments Group,” describing the initiative as “a plan that will improve production, employment and, above all, security.”

PGZ chief executive Sebastian Chwałek confirmed that the first effects of the investment will be visible by the end of 2025, noting that some plants are already increasing production. "Today we can announce the opening of tenders for the first investment projects. We want to implement the programme dynamically," he said.

Poland, one of Ukraine’s staunchest allies, has pushed for increased European defence production amid ongoing war with Russia. Tusk stressed that the investment would not only enhance domestic capabilities but also position Poland as a regional ammunition hub. “We are talking about a Polish, European and Ukrainian challenge,” he said.

Kosiniak-Kamysz also voiced concern over the US decision to halt arms deliveries to Ukraine, calling the move “not good news” for Poland, TVN24 reported on 2 July.

Speaking at a press conference, Kosiniak-Kamysz stressed that Ukraine must be supported so it doesn’t falter in its fight against Russian aggression. “I regret that the Americans are making such a decision,” he said. “I wish it were happening differently.”