One of the world’s biggest weapons buyers, the United Arab Emirates, is revamping its burgeoning defense industry to lessen the country’s dependence on foreign arms-makers, just as Western firms scramble for deals in the Middle East.

The U.A.E. is merging more than a dozen local, state-owned defense equipment suppliers, aiming to be more self-reliant in outfitting its armed forces. The country has one of the region’s most modern forces, but it remains relatively small. But it has stepped up activity recently, including conducting airstrikes with allies against Islamic State.

The move to consolidate is already affecting purchasing. At a big defense-industry trade show taking place this week in Abu Dhabi, the country’s military by the end of Wednesday had awarded $4.3 billion in defense contracts, most of which—some $3 billion-worth—went to local companies. […]