Serbia is preparing a combat-drone manufacturing venture involving state arms group Yugoimport-SDPR and Israel’s Elbit Systems. Public statements have described the project as a roughly equal partnership, although earlier reporting indicated that Elbit could hold 51 per cent.
The investment value, factory location, production capacity and commissioning date remain undisclosed. Serbia has already established a substantial commercial relationship with Elbit, including a US$335 million acquisition of PULS artillery systems and Hermes drones in early 2025. A subsequent Serbian procurement package covering missiles, drones and electronic-warfare equipment was valued at approximately US$1.6 billion.
Moving from procurement to domestic production could create higher-value engineering employment and strengthen Serbia’s defence exports. The real economic benefit will depend on technology transfer, ownership of intellectual property, local supplier participation and whether Serbian-manufactured systems can be exported without Israeli approval.
Defence manufacturing offers stronger margins than conventional subcontracting but also creates political and compliance exposure. Serbia must manage export controls and end-user verification while balancing commercial relationships with the EU, Israel, Russia and non-aligned markets.
