Overhauling and upgrading aircraft, a continuous line of warships, and onshore manufacturing of guided weapons and explosives are priority areas in a defence industry master plan.
Defence Industry Minister Pat Conroy on Thursday unveiled a new plan to bolster Australia's capabilities.
The plan also named autonomous weapons and enhanced land systems as part of seven industrial priorities to take the nation forward.
"We've cut the number of industrial priorities from 14 to seven because one of the messages I've heard from defence industry is, if everything's a priority, nothing's a priority," he told reporters in Canberra.
"People want clear guidance on where we will intervene."
The plan also sets out a blueprint for making Australia's most important capabilities homegrown to ensure the nation can stand on its own two feet.
"We've been very clear that in a very narrow range of capabilities, to be part of the sovereign industrial base, you'll need to be Australian-owned as well," Mr Conroy added.
Simplifying procurement processes, growing exports and building up a skilled workforce were all flagged to strengthen the sector.
A powerful parliamentary defence committee that can receive confidential briefings to ensure oversight of sensitive projects will be set up to boost accountability, the minister said.
Defence industry will also receive more classified briefings so they can understand what's coming down the line and make investments in those capabilities, Mr Conroy said.
Chief defence scientist Tanya Monro flagged electronic warfare as a priority area that AUKUS partners - which include the US and UK - are focused on.
There would be triple the scrutiny and oversight with each of the three nations working together to boost industry, Professor Monro said.
"What we're working towards is bringing together the best elements of each of our nation's industrial bases," she said.
"That will allow us to very quickly accelerate the best of breed from each of our nations for solutions."
The coalition welcomed the plan but criticised the government for the time taken to release it after a landmark defence force review, saying it caused confusion in the industry.
"The opposition stands with defence industry in calling for the prompt release of a fully funded Integrated Investment Program, to allow industry to plan and invest with confidence," opposition defence spokesman Andrew Hastie said.
The defence industry supports over 100,000 Australian jobs.
