EDIP and USI Grants for Defence Production Reinforcement

The call for proposals is organised by the European Commission through the Directorate-General for Defence Industry and Space (DG DEFIS) within the implementation of the 2026–2027 Work Programme in accordance with Regulation (EU) 2025/2643 (EDIP Regulation) and EU Financial Regulation 2024/2509.

The programme is a key instrument of the European Union aimed at enhancing defence industrial readiness, competitiveness, and resilience of the European Defence Technological and Industrial Base (EDTIB). Simultaneously, a dedicated component of the programme — the Ukraine Support Instrument (USI) — is specifically created for the recovery, reconstruction, modernisation, and capacity building of the Ukrainian Defence Technological and Industrial Base (DTIB) with a view to its full future integration into the European defence industrial framework.

Main Call Topics and Areas:

1. EDF-EDIP-P-2027-LS-IRA-KEC (Key Electronic Components): This topic focuses on eliminating critical bottlenecks in electronic component supply chains. Activities eligible for funding include the expansion and modernisation of production capacities for guidance electronics, flight controllers, satellite navigation equipment (including Galileo PRS), inertial measurement units (IMUs), power electronics, battery management systems (BMS), radio frequency and laser modules, optoelectronic and thermal imaging sensors, high-density printed circuit boards (PCBs), integrated circuit substrates (IC substrates), lithium-ion batteries, as well as specialised semiconductors, FPGAs, ASICs, electronic warfare (EW) equipment, and C4ISR systems.
2. EDF-EDIP-P-2027-LS-IRA-PE (Platforms and End-Products): This topic aims at expanding industrial capacity for the manufacturing, assembly, and integration of finished defence platforms and complex systems. Funding covers artillery systems, armoured and special-purpose vehicles, aircraft (fixed-wing and rotary-wing), unmanned and counter-unmanned systems, missile and anti-missile systems, precision-guided munitions (PGM), radar stations, mine warfare systems (land and naval), surface and underwater naval platforms, torpedoes, firearms, as well as satellite payloads and terminals. Separate support is provided for forging/machining, composites manufacturing, Manufacturing as a Service (MaaS) solutions, and the repurposing of heavy civil industry for defence needs.
3. EDF-EDIP-USI-2027-LS-IRA-CUXS (Unmanned Systems and Counter-Unmanned Systems): A dedicated topic under the Ukraine Support Instrument designed to ensure the rapid industrial reinforcement of production lines for unmanned (air, land, naval) and counter-unmanned systems in the EU and Ukraine for their urgent supply. Eligible activities include swarming UAVs, FPV drones, interceptors for site and logistics protection, EW-resilient and fibre-optic solutions, jamming, spoofing, and optoelectronic detection systems, the deployment of joint European-Ukrainian manufacturing lines, MaaS pathways, and mobile, rapidly reconfigurable lines adapting to evolving battlefield conditions.

Key Specific Requirements and Conditions of the Call:

• Component Origin Requirement: The cost share of components originating from outside the EU, Ukraine, and EDIP associated countries must not exceed 35% of the total cost of components of the product whose production is being scaled.
• Design Authority: Projects must retain full technical and legal control over the product architecture, specifications, and the ability to freely replace or remove components subject to restrictions or vetoes by non-associated third countries.
• Physical and Cyber Protection of Production: Applicants have the option to include a dedicated Work Package to strengthen physical security (including protection against UAV threats) and cybersecurity of production facilities and networks in compliance with NIS2 Directive, ISO/IEC 27001, IEC 62443, and EUCC standards.
• Grant Form: Funding is provided in the form of a lump sum grant based on an approved estimated project budget.

Legal Status Requirements:

• Applicants (beneficiaries and affiliated entities) must be legal entities (public or private bodies, state enterprises, research institutes, entities).
• Natural persons are NOT eligible (except self-employed sole traders without separate legal personality).
• International organisations are NOT eligible, unless their members are exclusively EU Member States or Ukraine and their executive management is located in the EU or Ukraine.

Geographic Establishment:

Applicants must be established and have their executive management structure in:

• EU Member States (including overseas countries and territories — OCTs);
• EDIP associated countries (or countries negotiating association);
• Ukraine (territories under effective control of the Government of Ukraine; entities established in non-government-controlled areas of Ukraine are ineligible).

Consortium Composition:

• For EDIP Topics (KEC and PE): Applications may be submitted by single SEAPs or consortia (up to 15 legal entities) comprising at least 3 independent entities from 2 different EU Member States.
• For USI Topic (CUXS): Applications may be submitted by a single applicant established in Ukraine or a consortium (up to 15 legal entities). Consortia must include at least one legal entity established in Ukraine with executive management in Ukraine.

Ownership and Control Assessment:

• Applicants must not be subject to control by a non-associated third country (e.g., Russia, China) or a non-associated third-country entity.
• Exception: Foreign-controlled entities may participate only if they have undergone Foreign Direct Investment (FDI) screening under Regulation (EU) 2019/452 or provided approved national security guarantees confirming the absence of security risks to the EU.

• Exclusion Criteria: Entities in bankruptcy, liquidation, tax or social security default, guilty of grave professional misconduct, fraud, corruption, money laundering, terrorism financing, or subject to EU sanctions or conditionality measures (e.g., Hungarian public interest trusts) cannot participate.

The total estimated call budget is €357,000,000 (€275,000,000 under EDIP and €82,000,000 under USI).

Budget Breakdown by Topic:

• EDF-EDIP-P-2027-LS-IRA-KEC (Key Electronic Components): €122,250,000.
• EDF-EDIP-P-2027-LS-IRA-PE (Platforms and End-Products): €152,750,000.
• EDF-EDIP-USI-2027-LS-IRA-CUXS (Unmanned and Counter-Unmanned Systems): €82,000,000.

Note: The final available budget depends on the adoption of the 2027 EU budget by the EU budgetary authority. The granting authority reserves the right not to award all available funds or to redistribute them between priorities.

Project Budget Thresholds:

• Minimum Project Size (Total Eligible Costs): Total eligible project costs must not be less than €2,000,000.
• Maximum Requested Grant Amount:
• For KEC: up to €20,000,000.
• For PE: up to €30,000,000.
• For CUXS (USI): up to €10,000,000.

Form of Funding and Reimbursement Rates: Grants are awarded as a Lump Sum contribution based on an estimated project budget. Actual incurred costs do not need to be reported during implementation — payment is made upon proper completion and delivery of Work Packages.

• For EDIP Topics (KEC and PE):
  • Baseline Funding Rate: 35% of the estimated eligible project budget. The remaining 65% must be co-financed by the consortium members.
  • Increased Funding Rates (Bonuses): The funding rate may be increased up to 42.5% or 50% under the following conditions:
    • +7.5% Bonus: If more than 50% of the consortium beneficiaries are SMEs or mid-caps, or if the project creates new cross-border cooperation between EU entities or Ukraine.
    • +7.5% Bonus: If the action builds new infrastructure or scales up existing manufacturing capacity for crisis-relevant products.
• For USI Topic (CUXS):
  • Funding Rate: 100% of eligible costs (no co-financing required from applicants).

Cost Category Rules and Limits:

• Physical & Cyber Protection Work Package: Includes procurement and installation of counter-UAV measures, network cyber protection, and certification. The maximum EU contribution for this optional WP is limited to €500,000 (for EDIP) and €200,000 (for USI).
• Management and Coordination (WP1): Coordination and project management costs in WP1 should not exceed 10% of the total project cost.
• Direct Personnel Costs: Eligible. Standard EU unit costs apply for SME owners and natural persons.
• Equipment and Machine Tools: Eligible at full acquisition cost.
• Subcontracting Costs: Subcontracted work must be performed exclusively in eligible countries (EU/Ukraine). Subcontracting exceeding 30% of total eligible costs must be explicitly justified in the application.
• Travel and Subsistence: Only actual costs are eligible.
• Kick-off Meeting: Eligible travel expenses for a maximum of 2 persons from the consortium to Brussels.
• Indirect Costs: Calculated as a flat rate of 7% of direct eligible costs (categories A–D).
• Value Added Tax (VAT): Non-deductible/non-refundable VAT is eligible. VAT paid by public bodies acting as public authority is ineligible.

Ineligible Costs:

• Financial Support to Third Parties (FSTP / sub-granting) is strictly prohibited.
• Costs for creating separate project websites (only communication on participants' existing websites/social media channels is eligible).
• Costs for activities, resources, equipment, facilities, or assets located or held outside eligible countries.
• Double funding — any costs already covered by other EU funding sources or private grants.

Funding is provided for activities aimed at accelerating industrial adaptation and capacity expansion for defence products, components, and specialized raw materials:

• Capacity Optimization and Expansion: Optimization, expansion, modernization, automation, upgrading, or repurposing of existing production lines, as well as establishing new production capacity; procurement, acquisition, and installation of machine tools and necessary inputs.
• Cross-Border Partnerships and Sourcing: Establishment of cross-border industrial partnerships (including PPPs, SMEs, and mid-caps); joint coordination of sourcing, stockpiling, component/raw material reservation, and production planning.
• Surge Manufacturing Capacity: Building up and maintaining reserved surge manufacturing capacity ready for rapid activation during demand spikes.
• Industrial Scale-up and Commercialization: Fostering the industrialization and commercialization of defence products; ramping up initial series production and licensing production.
• Testing, Infrastructure, and Obsolescence Management: Establishing testing infrastructure, conducting testing, reconditioning, and certification; addressing component obsolescence for operational reuse.
• Physical and Cyber Protection of Production (Optional WP): Procurement, installation, and integration of counter-UAV detection and protection systems; cybersecurity hardening, network monitoring, access control, EUCC cybersecurity certification, and alignment with NIS2, ISO/IEC 27001, and IEC 62443.

• 17 June 2026 — Official call opening and electronic submission system available on the EU Portal.
• 16 February 2027, 17:00:00 CET (Brussels time) — Deadline for submitting encrypted online applications. System closes automatically.
• February – May 2027 — Admissibility, eligibility checks, and technical evaluation by the evaluation committee assisted by independent experts.
• June 2027 — Evaluation result letters sent to applicants. Successful proposals are invited for grant preparation; others are placed on the reserve list or rejected. Proposals passing the threshold but lacking budget allocation receive a Seal of Excellence.
• September 2027 — Grant Agreement signature.
• Project Duration: Standard duration ranges between 36 and 60 months (3–5 years).
• Completion Deadline: All project activities must be fully completed no later than 31 December 2033.

Applications must be submitted electronically via the EU Funding & Tenders Portal. Paper submissions are not accepted (except for classified information procedures).

• Step 1. System Registration: Create an EU Login account; register the organisation in the Participant Register to obtain a 9-digit Participant Identification Code (PIC); complete the Portal SME wizard if claiming SME/mid-cap bonus status.
• Step 2. Part A Form: Complete administrative participant details and the summarized budget directly online via the Portal Electronic Submission System.
• Step 3. Technical Part B and Annexes: Download official Word/Excel templates; complete Part B (technical project narrative, strictly maximum 70 pages); fill in all mandatory annexes.
• Step 4. Encryption and Archive Upload: Assemble Part B and annexes into a single ZIP archive; encrypt the archive using AES-256 password protection (maximum size 100 MB); upload the encrypted ZIP archive to the Portal before the call deadline.
• Step 5. Password Submission: Before the call deadline (16 February 2027, 17:00 CET), send the decryption password to DEFIS-EDIP-PROPOSALS-PWD@ec.europa.eu, clearly stating the Proposal ID and exact ZIP file name.

Classified Information: Classified parts of applications must NOT be uploaded online. Applicants must contact DEFIS-DEFENCE-SECURITY@ec.europa.eu in advance to arrange physical or encrypted courier delivery.

Proposals are evaluated across 6 award criteria. Each criterion is scored on a scale from 0 to 5 (half-points allowed). The overall score is calculated using weighting factors up to a maximum of 60 weighted points.

Overall Pass Threshold: 39 points out of 60. There are no individual pass thresholds per criterion, but proposals scoring below 39 points overall are rejected.

Award Criteria Breakdown and Weights:

• Objectives [Max 5 points, Weighting: 2 | Max Weighted Score: 10]:
  • Alignment with call objectives, scope, and priorities;
  • Contribution to competitiveness, defence readiness, and EDTIB/DTIB expansion;
  • Integration of the Ukrainian defence sector into the European ecosystem.
• Timely Availability and Supply [Max 5 points, Weighting: 2 | Max Weighted Score: 10]:
  • Ability of the project to ensure uninterrupted, reliable, and timely supply of defence products in required volumes;
  • Risk management effectiveness in supply chains, mitigation of critical dependencies, and obsolescence management.
• Cross-Border Cooperation [Max 5 points, Weighting: 2 | Max Weighted Score: 10]:
  • Depth and quality of cross-border industrial cooperation between EU and Ukrainian entities;
  • Level of SME and mid-cap inclusion, creation of new industrial partnerships and PPPs.
• Expected Results [Max 5 points, Weighting: 1 | Max Weighted Score: 5]:
  • Compliance with expected results specified in the call text;
  • Clarity, realism, and justification of project KPIs (e.g., output units/month, time-to-rate, yield rates, line availability).
• Production Lead Time & Capacity [Max 5 points, Weighting: 2 | Max Weighted Score: 10]:
  • Measurable reduction of production lead time from order/decision to delivery;
  • Scale of actual production capacity increase, establishment of surge capacity, and workforce training.
• Implementation [Max 5 points, Weighting: 3 | Max Weighted Score: 15]:
  • Effectiveness, logic, and practicality of the work plan structure and Work Packages;
  • Clarity, relevance, and measurability of Milestones and Deliverables;
  • Appropriateness of management structures, risk management procedures (including technical, security, and logistics risks), and allocation of tasks/resources.

Priority Order for Ex Aequo Proposals (Tie-breaking):

In case of equal total scores, priority is determined sequentially based on scores in the following criteria:

1. "Production lead time and increase in production capacity";
2. "Expected results";
3. "Objectives";
4. "Timely availability and supply";
5. "Cross-border cooperation";
6. "Implementation".

If scores remain equal, priority is given to proposals with a higher number of participating EU Member States or Ukraine.

• When submitting an application to the electronic system, all mandatory forms and annexes without exception must be uploaded in the specified format (the absence or improper formatting of even one of them will result in the application being declared inadmissible):

• Application Form Part A: Administrative participant details and summarized project budget (completed online).
• Application Form Part B: Technical project description detailing objectives, work plan, Work Packages, risk management, and impact (Word template converted to PDF, limit: 70 pages).
• Detailed Budget Table: Excel calculation table detailing cost categories (personnel, equipment, subcontracting, travel, indirect costs) supporting lump sum estimates.
• Participant Information: CVs/profiles of key personnel and summaries of previous relevant projects.
• List of Infrastructure, Facilities, Assets and Resources: Inventory of existing manufacturing/testing facilities and equipment to be committed.
• Ownership Control Declarations: Declarations regarding ownership structure and absence of non-associated third-country control for all beneficiaries, affiliated entities, and associated partners.
• Procurement Strategy: Document detailing component origin calculations proving non-EU/Ukraine component costs will not exceed 35%.
• Declaration of Honour (DoH): Self-declaration of eligibility, capacity, and absence of exclusion grounds, signed prior to grant agreement signature.

Monitoring and Reporting:

• Progress Reports: Submitted every 6 to 12 months (exact schedule fixed in the Grant Agreement). Reports are not linked to payments but serve to monitor progress towards objectives.
• Component Origin Reporting: Mandatory reporting supported by documentary evidence (contracts, tendering elements, customs declarations) to verify compliance with the 35% non-EU/Ukraine component cost ceiling.
• Lump Sum Delivery Proof: Grant funding allocated to a Work Package is released only upon its full and proper implementation in accordance with Annex 1 of the Grant Agreement.

Security Compliance:

• Handling of classified information is governed by the national security frameworks of participating Member States pursuant to Council Decisions 2013/488/EU and 2015/444, as well as bilateral security agreements with Ukraine.
• Projects handling classified data require a project-specific Security Aspect Letter (SAL) integrated into the Grant Agreement.

Financial and Legal Compliance:

• Audits and Record-Keeping: Beneficiaries must maintain records of work performed and results achieved. Authorised EU bodies (DG DEFIS, OLAF, EPPO, European Court of Auditors) may carry out audits and checks.
• No Double Funding: Declaring the same cost items under multiple EU grants is strictly prohibited.
• No-Profit Rule: Grants must not generate a net profit for beneficiaries upon action completion.

The regulatory framework of the call is governed by EU Financial Regulation 2024/2509, Regulation (EU) 2025/2643 (EDIP Regulation), as well as the EDIP/USI Work Programme for 2026–2027.

The primary legal requirements and legal conditions for applicants are:

• Ownership and Control Restrictions:
  • Participants (beneficiaries, affiliated entities, and associated partners) must not be subject to direct or indirect control by non-associated third countries (in particular, the Russian Federation, China, etc.).
  • In the case of foreign control, participation is permitted exclusively on condition of providing officially approved legal guarantees by EU/Ukrainian state authorities or confirmation of passing foreign direct investment screening (FDI Screening).
• Design Authority:
  • Participants must retain full legal and technical control over the defence product's architecture, specifications, and source code.
  • Contracts, licenses, or legal veto rights by third-country entities that could limit, block, or prohibit the modification, replacement, or removal of product components are not allowed.
• Component Origin Threshold:
  • The total cost share of components procured in third countries (outside the EU, Ukraine, and EDIP associated countries) must not exceed 35% of the total component cost of the defence product.
• Security Framework:
  • The processing and transfer of classified information are carried out in strict accordance with Council Decisions 2013/488/EU and 2015/444, as well as bilateral security agreements with Ukraine.
  • Participants are required to sign a Security Aspect Letter (SAL), and involved personnel must hold an appropriate level of security clearance.
• EU Restrictive Measures & Conditionality:
  • Entities subject to restrictive measures (EU sanctions) pursuant to Article 29 of the Treaty on European Union (TEU) or Article 215 of the Treaty on the Functioning of the European Union (TFEU) are strictly prohibited from participating in any capacity.
  • The participation of organizations subject to measures under the EU budget protection conditionality framework (Regulation 2020/2092, such as Hungarian public interest trusts) is prohibited.
• IPR Rules and Non-Profit Rule:
  • Intellectual property rights generated during the project implementation remain the property of the participants and cannot be transferred or exported outside the EU/Ukraine without official permission.
  • Awarded grant funds are subject to the "no-profit rule" and the prohibition of double funding from other EU programmes.