Peru’s Military Production Surge: $3.4B Shift from Imports to Homegrown Power

For decades, Peru’s military modernization meant shopping abroad. Warships from Europe, rifles from America, aircraft from Russia—a pattern repeated across generations. Now, President Dina Boluarte’s administration is flipping the script with an unprecedented $3.4 billion investment to ignite Peru’s military production capabilities. Defense Ministry data confirms this 2025 allocation is the largest in Peru’s modern history, marking a strategic pivot toward self-reliance that could reshape both its security and industrial landscape.

Peru’s $3.4 Billion Defense Revolution

The funding fuels an ambitious plan to replace foreign arms purchases with domestically built ships, weapons, and aircraft. Defense Minister Walter Astudillo emphasized this “industrial transformation” aims to strengthen sovereignty while creating over 12,000 skilled jobs by 2040. Instead of importing ready-made equipment, Peru’s armed forces now contract state-owned enterprises and private manufacturers. At Callao Naval Base, SIMA shipyard engineers work alongside South Korea’s HD Hyundai Heavy Industries on four new frigates and patrol vessels—Peru’s first major warships built locally since the 1980s. SIMA CEO Alejandro Tiana notes the project trains 350 Peruvian technicians in advanced welding and combat systems integration, skills transfer previously absent in import deals.

Simultaneously, the Army’s historic FAME factory in Lima now mass-produces assault rifles using licensed technology from European arms manufacturers. Nearby, armored vehicle assembly lines integrate Peruvian-made electronics with imported chassis. In the skies, the Air Force collaborates with SEMAN to manufacture aircraft components for maintenance and export. “We’re not just assembling—we’re mastering technologies,” says SEMAN engineer Luisa Díaz.

Beyond Security: Economic Resilience Anchored in Military Production

This industrial shift transcends defense needs. Officials project a multiplier effect: every dollar invested in military production stimulates $2.50 in ancillary industries like metallurgy, software, and precision engineering. Policies now mandate that 40% of components in defense projects originate domestically by 2027, creating guaranteed markets for 200+ local suppliers. Proposed legislation would lock in these reforms, ensuring continuity beyond political cycles.

Economist Carlos Parodi of Universidad del Pacífico highlights broader implications: “This scales Peru beyond raw material exports. Technical skills from shipbuilding or aerospace can spill into renewable energy or medical devices.” Recent labor ministry reports confirm defense manufacturing jobs pay 30% above Peru’s industrial average, offering pathways from poverty in regions like Puno and Piura where subcontractors operate.

Peru’s $3.4 billion military production surge marks a decisive break from import dependency, forging security through economic empowerment. By anchoring defense needs in homegrown innovation, Peru isn’t just building ships—it’s constructing a resilient industrial future. This bold vision positions Peru as a South American pioneer in converting military investment into broad-based growth. Explore how this transformation unfolds at Peru’s Defense Ministry portal.

Must Know

Q: What triggered Peru’s shift to domestic military production?
A: Security concerns over supply-chain vulnerabilities during global crises, combined with a strategic push for industrial diversification. Defense Ministry 2023 White Paper identified import reliance as a national risk.

Q: How will Peru fund this $3.4 billion initiative?
A: Through redirected procurement budgets, sovereign bonds, and partnerships like SIMA’s joint venture with HD Hyundai. No tax increases are planned.

Q: Which sectors benefit beyond defense?
A: Steel, telecommunications, and software development gain contracts. The National Society of Industries estimates 45% of spending will flow to private suppliers.

Q: Does Peru have the technical capacity for advanced manufacturing?
A: Partnerships with South Korean, European, and Brazilian firms include mandatory technology transfer. Workforce training programs launched in 2023 at SENATI technical schools.

Q: How does this affect Peru’s foreign relations?
A: Diplomats stress collaborations continue, but on Peru’s terms. Ambassador to the U.S., Alfredo Ferrero, noted: “We seek partners, not suppliers.”