Russia’s leading defence firms recorded strong revenue growth in 2024, driven by surging domestic demand for weapons to sustain the war in Ukraine, even as Western sanctions and falling arms exports weighed on international sales,

Russia’s arms-makers boosted income last year despite Western sanctions and falling foreign sales thanks to the insatiable hunger of the country's own military, according to new data released by the Stockholm International Peace Research Institute.

According to SIPRI’s annual ranking of the world’s 100 largest arms-producing companies, “The two Russian arms companies in the Top 100, Rostec and United Shipbuilding Corporation, increased their combined arms revenues by 23% to $31.2bn, despite international sanctions that led to a shortage of components. Domestic demand was enough to more than offset the revenues lost due to falling arms exports.”

Russian arms exports have dropped by 50% since pre-war. Russian arms exports, which previously brought in $14bn annually, have decreased by half compared to 2022, according to Sergey Chemezov, CEO of Rostec, a Russian state-owned defence conglomerate headquartered in Moscow.

He explained that the company's enterprises are now working primarily to supply the needs of the Russian occupation army. Additionally, sanctions imposed on Rostec since February 2022 have complicated the operations of both the civil and defence divisions. Nevertheless, Chemezov promised that exports will resume soon as the defence production goes into surplus again.

Russian President Vladimir Putin is currently in India on a state visit where one of the items high on the agenda is a deal for S-400 air defence missiles and possibly the supply of its latest Su-57 fifth generation fighter jet.

Russia announced the first exports of the Su-57 fighter jet to another country's in a deal believed to be with Algeria. Russia is thought to have built about two dozen Su-57s.

Global arms revenues reached a record $679bn in 2024, a 5.9% increase y/y, according to SIPRI. Most of the rise came from manufacturers in the United States and Europe, where governments are rearming in response to Russia’s invasion and escalating tensions in the Middle East. For the first time, nine companies in the Top 100 were based in the Middle East, reflecting a shift in the global arms landscape.

SIPRI also warned that Europe’s ReArm drive launched by European Commission President Ursula von der Leyen on March 4 (video) could be threatened by Chinese export controls on critical raw materials, potentially causing supply bottlenecks in the defence industry, Politico reports.

Russia’s defence spending continues to surge. Last week, the State Duma approved a new budget allocating RUB39.5tn ($487bn) for military and weapons procurement over the next three years — a record sum that includes steep increases in security spending, alongside tax hikes and cuts to healthcare.

 

Over the next three years, Russia plans to spend RUB39.5 trillion ($487bn) on its military and weapons acquisitions.

 

Russia restocking arms and ammo

Russian President Vladimir Putin immediately put Russia’s entire economy at the start of the war and invested heavily into military production. That decision is now paying dividends as Russia’s defence sector production has gone into surplus now. Russia is producing more guns and ammo than are being consumed on the battlefield. It has started stockpiling materiel as it begins what will be a decade long process of rebuilding its military might.

Russia plans to double its missile production to 2,500 by the  end of this year and can already produce 2,700 drones a month, according to Ukraine's Main Directorate of Intelligence (HUR), Ukrainska Pravda reported on September 8.

Moscow has been ramping up its missile production as the conflict in Ukraine transitions to a missile war since May when daily attacks by drones and missiles roughly tripled as Russian President Vladimir Putin attempts to turn the screws on Bankova (Ukraine’s equivalent of the Kremlin) as US sponsored ceasefire talks got underway.

Russia is also producing a surplus of tanks and APC and has more armoured than it did at the start of the conflict, Euromaidan Press reported on December 3.

According to open-source analysts cited in the report, Russia has lost up to 16,100 armoured vehicles during the invasion. However, it has replenished its forces by reactivating nearly 13,000 vehicles from long-term storage and introducing approximately 4,000 new ones. As a result, Russia’s total fleet has grown from 20,000 vehicles in early 2022 to around 21,000 by late 2025.

Analysts estimate that with constant 2025 loss levels and stable new production, the total fleet remains above 2022 levels until at least 2030. While the quality of the reintroduced and newly produced vehicles may be lower than that of modern platforms lost in combat, their availability reinforces Russia’s capacity to sustain mechanised assaults.

Infantry fighting vehicles (IFV) and tank numbers have seen modest declines, largely due to limited availability in storage. In contrast, the number of armoured personnel carriers (APCs) has grown by 38% since 2022 and are key in the drone-infested frontlines. The advent of drone swarms have largely driven tanks from the battlefield that now act more as mobile artillery and don’t support assaults.

Russia has also ramped up its production of 152-millimetre artillery shells to 1.3mn a year, a 420% increase from 2022, and manufactured 700 Iskander short-range ballistic missiles in 2024 alone.