"We are going to work together to produce weapons and munitions in Ukraine", said German Defence Minister Boris Pistorius during a press conference with his French counterpart Sebastien Lecornu.
KNDS "will set up a subsidiary in Ukraine", the initial aim of which will be to train Ukrainians and "rapidly produce spare parts, particularly for systems that have already been delivered", said Lecornu, without giving a timeframe.
Ukraine has been suffering from serious ammunitions and weapons shortages in its fight against Russia, which has been making battlefield gains in recent months.
This agreement follows a recent announcement by German Chancellor Olaf Scholz and French President Emmanuel Macron of an initiative for military production in Ukraine.
Such a facility has "enormous value, since production capacity is closer to the front line, which means fewer logistics and greater reliability of supply", said Lecornu.
KNDS is a tie-up between Nexter from France and Germany's KMW, and has a particular focus on producing battle tanks, other armoured vehicles and artillery systems.
German arms maker Rheinmetall is also setting up operations in Ukraine.
In February, it announced an agreement with a Ukrainian company to manufacture artillery shells in Ukraine.
Last week, the company said it plans to set up at least four factories in Ukraine for producing shells, military vehicles, gunpowder and anti-aircraft weapons.
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