Five companies to watch for

With an estimated start-up capital of US$15 million (Dh55m), Caracal became the region's first handgun manufacturer last year. Caracal has contracts with armed forces and police departments in Abu Dhabi, Dubai, Jordan and Bahrain. It expects to produce up to 50,000 pistols in 2008 for local customers and then target the US market in 2009.

Equipped with a 20-year contract with the UAE Army worth more than Dh1 billion (US$272m), Al Taif will launch later this year as a provider of maintenance, overhaul and repair services for military vehicles, with the eventual goal of regional expansion. Al Taif is a unit of Mubadala, the Government-owned investment vehicle.

The UAE's best-known military contractor, ADSB is a reputable ship repair and building firm in Musaffah. It was formed in 1995 through a joint venture with Newport News, a major US shipbuilder. It is currently building six 72-metre long "pocket warships" for the UAE Navy in a deal worth $1bn.

Al Burkan was set up last year and is investing Dh268m in its munitions plan in Zayed Military City. The company was set up by Tawazun Holding, Rheinmetall Munitions Systems from Germany, and the UAE-based Al Jaber Group. The site will manufacture aircraft bombs, artillery, and naval rounds and small arms ammunitions and also feature a munitions disposal plant.

Incorporated in 2005, EAI is a state-backed investment company, which has signed a deal to jointly develop rockets with Raytheon, the US defence contractor. EAI has described itself as a provider of "solutions for aerospace and defence, electronic systems, integrated systems and software, education and training".