Defence Minister Shinjiro Koizumi told an exchange of views with defence companies at the Ministry of Defense on 4 November that the government will draw up a new Defence Industrial Base Strategy by the end of the year. Its purpose is to strengthen the industrial base for 'new ways of fighting' with AI and unmanned systems, built on reserve production capacity for contingencies, government-owned, contractor-operated (GOCO) facilities and a shift to equipment development premised on exports. It is linked to the 'virtuous cycle of defence and the economy' in the three security documents being revised this year, with a bill to create an incorporated administrative agency to run the measures due in next year's ordinary Diet session.
Reserve capacity and GOCO-run production
Koizumi said that 'with Russia's invasion of Ukraine now in its fifth year and equipment and munitions consumed in volume, the importance of securing sustained response capability has become clear', adding that 'production and technological capacity now bear directly on response and deterrence, and countries are hurrying to prepare'. He said Japan must 'transform into a state that holds reserve production capacity with contingencies in view', and set out financial support to secure surge capacity and the use of GOCO arrangements under which private firms operate government-owned facilities.
The idea of reserve capacity changes the premise of a defence industry sized to peacetime orders. GOCO is the model used at US ammunition plants, where the state carries the capital cost and a company runs the plant. Japan's 2023 defence production base law allows the state to acquire manufacturing facilities, but the operating model has yet to be institutionalised. The year-end strategy will therefore be judged on whether it names which equipment and munitions are covered and how much reserve capacity the state will fund.
Export-oriented development and a reset of equipment policy
Koizumi said the ministry will 'fundamentally change the thinking and the promotion structure of equipment policy' and called for a shift to development premised on exports. As covered in earlier editions, the government intends to make the 'virtuous cycle of defence and the economy' a pillar of the revised three documents and to specify a new defence-industry body, which the Sankei reported would be an incorporated administrative agency co-founded with METI with an initial staff of about 300. The statement to industry bundles these into a single strategy and gives companies a basis for investment decisions.
With AI and unmanned systems at the centre of 'new ways of fighting', the industrial base in question includes domestic production of expendable drones. ATLA has asked firms with domestic production capacity for UAV warhead fuzes to provide information (letters of intent due 13 November), and Koizumi said in a speech on 3 November that the ministry's basic policy on AI use would be reviewed. With the industrial strategy and the AI policy review converging at year-end, aligning the production base with operating policy becomes the institutional task. The list of participating companies and the full text of the minister's remarks have not been published.
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Previous report: Japan to make a "virtuous cycle of defence and the economy" a pillar of its revised security documents, with a new defence-industry corporation
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AI & Security Observatory（2026-11-04）「小泉防衛相、防衛産業基盤戦略を年内に策定と表明 予備生産力とGOCO、輸出前提の開発を柱に」『AI & Security Observatory』、第1.0版、最終更新2026-11-05。https://ai-security-observatory.org/ja/brief/brief-20261105-03/
AI & Security Observatory (2026-11-04). Japan's defence minister pledges a Defence Industrial Base Strategy by year-end: reserve production capacity, GOCO plants and export-oriented development for AI and unmanned warfare . AI & Security Observatory, version 1.0. Updated 2026-11-05. https://ai-security-observatory.org/en/brief/brief-20261105-03/
Version 1.0 · Publication date 4 Nov 2026 · Updated 5 Nov 2026
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