Japan’s Terra Drone Supplies Weapons to Ukraine as Russia Warns of Retaliation

The Tokyo-based company announced on October 14 that it had supplied small interceptor drones to Ukraine’s Defense Procurement Agency through a local subsidiary, marking a new stage in its involvement in the country’s defense industry. Terra Drone had previously supplied equipment directly to Ukrainian military units, but the latest delivery represents its first formal procurement arrangement with the Ukrainian government.

Russian Foreign Ministry spokeswoman Maria Zakharova condemned the company’s activities on October 21, describing the delivery as an openly hostile and unacceptable act despite repeated Russian warnings. Moscow also indicated that the action would not go unanswered.

Terra Drone President Toru Tokushige said the company had anticipated such criticism when it entered the defense industry in September 2025. He noted that Russia had previously singled out the company following its investment in a Ukrainian drone manufacturer about six months earlier, making the latest condemnation its second direct warning.

Japan’s Defense Minister Shinjiro Koizumi defended the company’s activities on October 23, pointing out that Russia itself is one of the world’s leading arms exporters. He said Japanese private companies should face no objection as long as their operations comply with the law.

Terra Drone has rapidly expanded its Ukrainian operations since entering the defense sector. Tokushige has visited Ukraine approximately 15 times, acquiring local manufacturers and working directly with military units to develop equipment suited to actual battlefield conditions. The company now has three subsidiaries in Ukraine and has established production capacity exceeding 10,000 drones annually.

One of its principal products is the Terra A1, an interceptor developed jointly with a Ukrainian company to destroy incoming Russian attack drones, including the Iranian-designed Shahed aircraft extensively used by Russian forces. The Terra A1 can reach speeds of around 300 kilometers per hour and costs approximately 480,000 yen per unit to manufacture.

The relatively low production cost has been achieved partly through the use of 3D printing, allowing components to be manufactured quickly and efficiently. The aircraft has undergone repeated improvements based on combat experience, following a development process in which equipment is tested and modified directly on the battlefield.

Terra Drone acquired another Ukrainian drone company in June, expanding its ability to develop interceptor systems for different military requirements. In August, it also concluded a mass-procurement agreement with Japan’s Acquisition, Technology and Logistics Agency, with deliveries to the Self-Defense Forces beginning in September.

The company’s Ukrainian-made interceptors are manufactured locally, an arrangement intended to avoid restrictions under Japan’s regulations governing defense equipment transfers to countries involved in armed conflict.

The latest drones supplied to Ukraine’s Defense Procurement Agency differ from the larger interceptors designed to destroy Shahed aircraft. They are smaller systems intended for frontline operations in areas Ukrainian forces describe as “kill zones,” where Russian reconnaissance drones, explosive-laden first-person-view aircraft and inexpensive fixed-wing attack drones present a constant threat.

According to Tokushige, the smaller interceptors have been designed to travel approximately 50 kilometers per hour faster than the FPV drones they are intended to destroy. Their effectiveness depends not only on speed but also on reliability and ease of assembly under battlefield conditions.

One of Terra Drone’s Ukrainian partners, Clean Technology, supplies equipment used by Ukraine’s Third Army Corps. Tokushige said rapid deployment is particularly important because soldiers assembling equipment near the front line risk being detected and attacked by Russian drones. Poorly manufactured systems can require an additional 10 to 30 minutes of preparation, potentially exposing their operators to danger.

Ukraine’s military procurement system has also accelerated technological development. Unlike Japan, where defense equipment is generally purchased through centralized procurement procedures, Ukrainian military units can acquire drones directly from manufacturers according to their operational needs.

Ukraine has introduced a points-based system that rewards units for battlefield achievements, allowing them to purchase equipment through an online military marketplace. Approved military personnel can select drones from competing manufacturers, creating direct competition over price, performance and reliability.

This approach has encouraged manufacturers to reduce costs and rapidly incorporate battlefield feedback into their products. While conventional defense procurement can take a year or longer, Ukrainian units sometimes request modified equipment within two weeks or a month.

Tokushige said the decentralized system enables individual manufacturers to work closely with particular units, producing simultaneous technological improvements across different regions and applications. Equipment can undergo substantial changes every three months, requiring companies and component suppliers to maintain highly flexible development processes.

The spread of drone warfare is also transforming Europe’s industrial strategy, where governments are encouraging cooperation between automotive manufacturers and defense companies to expand military production.

French automaker Renault has announced partnerships with two defense companies involved in drone manufacturing, while German automotive supplier Schaeffler has entered similar arrangements with German and French defense manufacturers.

The partnerships are intended to capitalize on excess production capacity in Europe’s automotive industry, which faces growing competition from Chinese electric and hybrid vehicles and changes associated with the transition toward lower-carbon transportation.

At the same time, European defense manufacturers face shortages of skilled workers as Russia’s invasion of Ukraine continues to drive demand for military equipment.

Paul Taylor, a France-based researcher specializing in European defense and security, said automotive companies can contribute manufacturing expertise, production facilities and trained workers to the defense industry.

Under the emerging arrangements, automobile manufacturers can use existing facilities to mass-produce drone airframes, leaving defense companies to install explosives, electronic controls and other specialized equipment at separate locations.

One French defense manufacturer expects its production of one-way attack drones to increase from approximately 100 units in 2026 to 12,000 in 2027 through cooperation with Renault, representing a 120-fold increase.

European governments are playing an active role in encouraging such partnerships. Germany’s defense and economic ministries organized a joint industry summit in late 2025, leading to the creation of a digital platform that allows automotive and defense companies to identify potential manufacturing partners.

Companies can use the system to advertise production capabilities, technical requirements and opportunities for cooperation. Some European governments are also offering relocation assistance to automotive workers facing factory closures, while public funding supports retraining and skills development.

NATO Secretary-General Mark Rutte has urged member countries to prepare broader industrial production capabilities, including their automotive sectors, for situations requiring a rapid expansion of defense manufacturing.

Japan possesses comparable manufacturing expertise, particularly through its major automobile companies, but faces different industrial and political obstacles.

According to Tokushige, partnerships between automotive and defense manufacturers have become increasingly common in Europe, where governments regard military production as both a security priority and an opportunity to preserve industrial employment.

He said Japanese companies remain more reluctant to publicize their involvement in defense projects because of concerns about corporate reputation and commercial relationships, particularly with China.

For smaller technology companies, participation in defense projects can demonstrate the quality of their products. Larger manufacturers, however, must consider how defense-related activities could affect their established consumer businesses and overseas operations.

Tokushige said Japanese public attitudes toward the defense industry remain significantly different from those in Europe. He frequently encounters questions about the ethics of generating profits from military equipment, reflecting Japan’s longstanding commitment to pacifism and its postwar tradition of exclusively defense-oriented security policy.

The discussion has become increasingly important as the Defense Ministry prepares to expand the Self-Defense Forces’ use of unmanned systems.

Japan possessed approximately 2,500 military drones at the end of March 2026, considerably fewer than the numbers being produced and deployed by Ukraine and Russia. The United States has also accelerated its development of unmanned military equipment, with figures discussed in the Japanese defense debate reaching approximately 200,000 aircraft.

The Defense Ministry has outlined plans for a coastal defense system involving large numbers of drones, sometimes described as a coastal shield, intended to prevent hostile forces from approaching or landing on Japanese territory.

The initiative forms part of Japan’s broader effort to transform the Self-Defense Forces into an organization capable of making extensive use of unmanned assets. Officials are expected to consider further expansion when the country’s three principal national security and defense policy documents are revised.

Defense analyst Sugio Takahashi of the National Institute for Defense Studies said unmanned systems would become essential not only for defending Japan’s remote islands but also for compensating for the country’s declining population.

He warned that the number of available Self-Defense Forces personnel could fall to approximately 60% of current levels over the next two decades. Maintaining or improving defense capabilities with fewer personnel would require greater reliance on artificial intelligence and unmanned technology.

The challenge, however, extends beyond purchasing aircraft. Japan must develop a domestic manufacturing base capable of producing large numbers of drones and continuously improving their capabilities.

Takahashi argued that military procurement alone would be insufficient to sustain such an industry. Once the government completed a major acquisition program, orders could decline sharply, leaving manufacturers with expensive production facilities and insufficient business.

He said Japan would therefore need to expand civilian drone applications, including infrastructure inspection, security, logistics and surveillance, to generate stable demand between defense procurement cycles.

Current domestic drone demand is estimated at slightly more than 60,000 units annually, with government policy seeking to raise the figure to approximately 140,000 by 2030. Around 14 billion yen has been allocated to initiatives supporting the development of a stronger domestic industry.

Takahashi suggested that security certification requirements could help encourage the adoption of Japanese-made drones and components without introducing direct import restrictions that might conflict with international trade commitments.

The United States has adopted a more restrictive approach toward Chinese technology. Measures introduced in December 2025 sought to limit new approvals and sales of foreign-made drones and components, particularly those associated with Chinese manufacturers.

Tokushige said the American policy had created demand for alternative suppliers, encouraging domestic manufacturers of motors, batteries and other essential components to enter the market.

He argued that Japan should adopt a similar strategy by introducing domestic-content requirements into defense procurement contracts.

European governments have pursued another model, purchasing equipment from domestic drone startups and supplying it to Ukraine, thereby establishing substantial demand while supporting national defense industries.

Tokushige said such government-backed orders had enabled European startups to expand production and attract component suppliers. He pointed to European procurement arrangements favoring equipment with a substantial proportion of components sourced from Europe and Ukraine, including a benchmark of approximately 65%.

For Japan, he proposed requiring a significant share of drone components to be manufactured domestically, or introducing specific requirements for critical parts such as batteries, motors and flight controllers.

He argued that the most important challenge was not assembling complete aircraft, which requires comparatively straightforward manufacturing techniques, but developing the network of specialized suppliers needed to continually improve their performance.

A typical drone, he said, contains around 20 principal components, far fewer than the roughly 30,000 parts used in an automobile. Japan therefore possesses much of the manufacturing capability required to develop a domestic supply chain, provided companies receive sufficient orders to justify investment.

The difficulty is already apparent among smaller Japanese component manufacturers.

Goko Denko, a specialist motor manufacturer based in Fujimi, Nagano Prefecture, has begun developing drone motors using domestically sourced magnetic materials to reduce reliance on Chinese rare earths.

The company employs approximately 60 people and has experience manufacturing specialized motors for aviation, medical equipment and agricultural machinery.

Its latest development project began in September 2025 following requests from Japanese drone manufacturers seeking components less vulnerable to overseas supply disruptions.

China’s tightening of rare-earth export restrictions has increased concerns among Japanese manufacturers because conventional high-performance electric motors commonly rely on neodymium magnets and other materials supplied through Chinese-controlled production networks.

Goko Denko is attempting to replace these materials with domestically produced ferrite magnets.

Although ferrite is easier to source within Japan, its magnetic strength is considerably weaker than neodymium, creating engineering difficulties in achieving sufficient motor power.

The company has modified its motor design to make more efficient use of the weaker magnetic field, but testing has shown that further improvements are necessary.

The commercial challenge is equally significant. Developing a motor for large-scale production can require new manufacturing molds costing tens of millions of yen, and the investment becomes difficult to justify without guaranteed orders.

Goko Denko’s management said stable demand and clear production forecasts would be essential to continuing development. Although the government has identified drones as an important strategic industry, the domestic component supply chain remains at an early stage.

Tokushige warned that excessive dependence on overseas parts could undermine Japan’s ability to sustain military operations during a regional emergency.

He said Japanese manufacturers currently rely heavily on components sourced from Taiwan as well as China, raising concerns that supplies could be interrupted during a conflict involving Taiwan or the surrounding region.

In such circumstances, he argued, Japan could lose access to essential parts precisely when its defense forces needed to increase drone production and replace equipment lost in combat.

The issue is not limited to the initial manufacturing of aircraft. Tokushige said domestic suppliers would be critical to continuously improving military equipment as operational conditions changed.

He noted that Ukrainian manufacturers often modify drone designs every three months, requiring corresponding changes to motors, control systems and other components. Depending on overseas suppliers would make such rapid development more difficult during a conflict.

Tokushige acknowledged that domestic production would generally be more expensive than using Chinese parts. As an illustrative comparison, he estimated that a component costing 10,000 yen in China might cost 30,000 yen in Taiwan or approximately 50,000 yen in Europe or Japan.

Nevertheless, he argued that supply security justified the additional expense. An interceptor drone costing between 400,000 and 500,000 yen with imported parts might cost substantially more if manufactured using European or American supply chains, potentially reaching 2 million to 3 million yen.

Takahashi agreed that the relevant cost comparison should not be limited to drones from different countries. Interceptors must also be evaluated against conventional missile-based air defense systems, which can be considerably more expensive to operate against large numbers of inexpensive hostile aircraft.

However, he cautioned that Japan could not afford to delay the introduction of urgently needed military equipment until entirely domestic alternatives became available.

The Self-Defense Forces must expand their unmanned capabilities within a limited period, and domestic suppliers do not yet offer sufficient quantities of proven military equipment.

Takahashi said Japan would need to balance immediate procurement requirements with longer-term industrial development, gradually increasing domestic content as manufacturers established reliable production capacity.

Tokushige argued that the process should move considerably faster. Smaller suppliers often require orders for 1,000 or 10,000 units before committing to production, while the investment needed to manufacture each major component can reach approximately 50 million yen.

He said Japan’s existing support programs, including the Small Business Innovation Research framework, often operate over periods of several years, whereas the rapidly changing military technology environment requires much faster decisions.

From his experience in Ukraine, Tokushige suggested that development and procurement support should be concentrated into periods as short as one year.

He also raised concerns about the scale of potential drone attacks on Japan.

Based on information gathered from defense industry contacts, Tokushige suggested that China and North Korea might already possess substantial numbers of Shahed-type attack drones, potentially numbering between 100,000 and 200,000. These figures were presented as estimates rather than confirmed inventories.

He said Ukraine’s experience indicated that three to five interceptor drones might be required to defend against each incoming attack drone. Under a hypothetical scenario involving 200,000 hostile aircraft and five interceptors per target, Japan could require as many as one million defensive drones.

The estimate illustrates the potential scale of future requirements rather than a confirmed government procurement target.

Takahashi emphasized that Japan’s defense industry would also need a sustainable civilian market. Military orders could initially provide several years of support for domestic manufacturers, but civilian applications would ultimately determine whether production facilities remained economically viable.

He suggested that unused or aging military drones might eventually be transferred into civilian applications where appropriate, helping maintain demand and extend the usefulness of manufacturing capacity.

The debate also highlighted differing views over how much of Japan’s drone industry should be domestically self-sufficient.

Some participants argued that Japan should cooperate more closely with like-minded countries rather than attempting to manufacture every component independently. Shared production facilities, component supply chains and export markets could reduce costs while allowing partners to specialize in different technologies.

Such an approach would require reliable international relationships and confidence that critical supplies would remain available during an emergency.

Others maintained that the growing unpredictability of international politics made domestic manufacturing more important, particularly for components essential to national defense.

The discussion also raised questions about whether an expansion of military drone production could accelerate an international arms race.

As artificial intelligence becomes increasingly integrated into unmanned aircraft, future systems may gain the ability to identify and attack targets with diminishing human involvement, creating new ethical and security challenges.

Concerns were expressed that governments could become increasingly focused on expanding production without establishing adequate safeguards governing the use of autonomous weapons.

Japan’s defense industry therefore faces competing pressures: rapidly increasing military readiness, reducing dependence on potentially vulnerable overseas suppliers, maintaining economic competitiveness and preserving the country’s longstanding commitment to defensive security policies.

For Terra Drone, the conflict in Ukraine has provided an opportunity to develop and test new equipment under operational conditions, while demonstrating the speed at which drone technology can evolve when manufacturers work directly with military users.

For Japanese policymakers, the larger challenge is whether the country’s advanced manufacturing capabilities can be mobilized quickly enough to create a sustainable domestic drone industry without undermining the economic and security relationships on which Japan continues to depend.

Source: TBS

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