Defence Minister Boris Pistorius has sought to reassure Germans, saying that despite the new military service plan there was "no cause for concern... no reason for fear".
"The more capable of deterrence and defence our armed forces are, through armament through training and through personnel, the less likely it is that we will become a party to a conflict at all," Pistorius said.
Defence spending in Germany tumbled after the end of the Cold War, while conscription was suspended in 2011.
Given its past, Germany has long been shy of showing military might, but earlier this year Friedrich Merz announced that the rule for German defence "now has to be whatever it takes", following Russia's full-scale invasion of Ukraine.
Nato countries across Europe have come under pressure from President Donald Trump's White House to hike spending.
European moves to re-arm have meant significant revenue for Rheinmetall.
Its CEO, Armin Papperger, whose firm also supplies Ukraine, said: "We make a lot of money because there is a huge demand."
"We have to grow strong on vehicles, on ammunition, we have to have our own satellite competencies. We do much more on the electronics and artificial intelligence... than ever before," he said.
A US report last year suggested the Rheinmetall boss had been the target of a Russian assassination plot. There was no confirmation at the time and Mr Papperger would not be drawn on the report, saying: "I feel good, I feel safe."
Asked about whether he felt Europe was in a state of a cold or hybrid war, he said: "Whatever you call it, it's not a peaceful time."