Maximizing the Impact of the ITB Policy: A Strategy for Innovation and Sovereign Capability

The Industrial and Technological Benefits (ITB) policy framework is one of Canada’s most powerful tools to drive domestic innovation. By requiring defence contractors to undertake business activity in Canada equal to the value of their contracts, the policy can help Canadian innovators scale. Recent steps, including the May 2026 modernization of the ITB Model Terms and Conditions and the establishment of the Defence Investment Agency (DIA), which assumed responsibility for the policy in July 2026, are welcome progress. But important gaps remain.

Today, the Council of Canadian Innovators is publishing its latest policy blueprint, Maximizing the Impact of the ITB Policy: A Strategy for Innovation and Sovereign Capability. The blueprint outlines how Canada can strengthen the ITB framework so Canadian scale-ups capture lasting value from defence procurement, retain the intellectual property they develop, and access the capital they need to compete globally.

“Canada’s ITB policy plays an important role in helping Canadian-owned companies grow and contribute to our defence capabilities,” said Laurent Carbonneau, Vice President of Policy and Advocacy at CCI. “Our blueprint would build on that foundation by expanding access to growth capital and defence supply chains, while supporting the retention of intellectual property and strategic control in Canada. These improvements would help more Canadian innovators scale, compete globally, and strengthen Canada’s economic prosperity and sovereignty.”

The ITB Policy is estimated to contribute more than $5 billion to Canadian GDP and support over 40,400 jobs annually. This blueprint outlines a comprehensive framework to deliver more durable benefits for Canadian innovators: growth capital, Canadian retention of intellectual property, and pathways into defence supply chains.

"As an organization operating at the intersection of defence and innovation, we see firsthand the challenges Canadian firms face in accessing capital and defence supply chains. This blueprint offers a critical path forward,” said Ian Whytock, Co-Founder and Director at Vimy Forge. “Canada has the opportunity to shift from activity-based metrics toward outcomes that foster sovereign capability. Prioritizing growth capital and the long-term retention of Canadian intellectual property is the only way to ensure our innovators can scale effectively, maintain strategic control, and secure their place in the global defence market.”

In the blueprint, CCI and Vimy Forge recommend that the Defence Investment Agency (DIA) strengthen the ITB framework around these priorities:

• Channel outstanding obligations into Canadian scale-ups by establishing an ITB Innovation Fund: a professionally managed pool that gives contractors a clear pathway to invest in Canadian companies when they cannot identify suitable opportunities themselves. Independent investment managers would make final investment decisions.
• Close the intellectual-property retention gap by requiring verified, minimum five-year Canadian IP retention for Strategic Investment Transaction IP incentives, with bonus credits revoked if the commitment is broken.
• Expand capital access to domestic innovators by increasing the venture-capital multiplier from 5-to-1 to 9-to-1 and creating dedicated incentives for non-controlling equity and eligible non-dilutive growth capital.
• Recognize new supplier relationships and open the door to growth capital: Offer defence contractors a one-time credit for bringing a new Canadian startup into their supply chain, combinable with eligible investment incentives. Allow capital investments to qualify without an existing customer or supply-chain relationship, so Canadian companies can access growth funding before they become established defence suppliers.

Each recommendation is explained in detail in the blueprint.

Canada’s defence procurement can help build Canadian-owned capabilities and companies that compete globally. The opportunity is to make ITB obligations work harder for Canadian innovators, creating access to capital and markets while keeping the intellectual property, control and long-term economic value in Canada.

Download Maximizing the Impact of the ITB Policy: A Strategy for Innovation and Sovereign Capability by CCI in Partnership with Vimy Forge.

‍About the Council of Canadian Innovators (CCI) The Council of Canadian Innovators (CCI) is Canada's business council for the 21st century economy. We are a collective of over 175 of Canada's fastest-growing and most ambitious companies, and the founders, CEOs, and executives behind them, working together to improve the business conditions that help more homegrown companies scale, compete globally, and drive long-term prosperity. Learn more at canadianinnovators.org.
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About Vimy Forge
Vimy Forge is a not-for-profit national defence accelerator connecting Canadian innovation to defence. Founded by leaders with three critical backgrounds: Armed Forces experience, defence technology founders, and venture capital. Vimy Forge brings an integrated understanding of the operational, commercial, and investment realities required to build successful Canadian defence companies.

Working across industry, government, the Canadian Armed Forces, academia, and capital, Vimy Forge helps Canadian companies understand defence requirements, navigate procurement pathways, validate their technologies, attract investment, and prepare for adoption and scale.

Its mission is to strengthen Canada’s sovereign defence and security capabilities while helping innovative Canadian companies compete and grow in the defence market.

Learn more about our organization at vimyforge.ca.