Grant from the European Commission (DG DEFIS) for the Expansion and Reinforcement of Defence Industrial Production in the EU and Ukraine (EDIP)

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

The Programme is a key financial and regulatory instrument of the European Union aimed at enhancing defence industrial readiness, competitiveness, resilience, and adaptability of the European Defence Technological and Industrial Base (EDTIB).

The Call targetedly initiates and accelerates the structural adaptation of the defence industry to the evolving security environment, incentivises demand aggregation among Member States, eliminates critical supply chain bottlenecks, expands manufacturing capacities, and reduces production lead times for defence products.

Funding covers two key topics:

• EDF-EDIP-P-2027-LS-IRA-KEC (Key Electronic Components, including guidance electronics, power electronics, optoelectronic sensors, radio frequency modules, batteries, high-density printed circuit boards, and semiconductors for UAVs, missile systems, EW, and C4ISR);
• EDF-EDIP-P-2027-LS-IRA-PE (Platforms and End-Products, including artillery systems, armoured vehicles, aircraft, unmanned systems, precision-guided munitions, radars, mine warfare systems, naval surface and underwater platforms, firearms, and satellite terminals).

All projects must maintain robust risk management standards, comply with Design Authority control requirements and component origin thresholds, and ensure the capacity to rapidly upgrade products based on lessons identified from the battlefield.

• Legal Status: Applicants (beneficiaries and affiliated entities) must be legal entities (public or private). Natural persons and international organizations (with limited exceptions) are ineligible.
• Geographic Establishment: Applicants must be officially established and have their executive management structure in EU Member States (including OCTs) or EDIP associated countries.
• Ownership & Control Restrictions: Applicants must not be subject to direct or indirect control by non-associated third countries or third-country entities. Foreign-controlled entities are eligible only if they have passed Foreign Direct Investment (FDI) screening or provided national government security guarantees.
• Consortium Composition:
  • Applications may be submitted by single SEAPs or consortia (up to 15 legal entities).
  • Consortia must comprise at least 3 independent legal entities from 2 different EU Member States.
• Exclusion Grounds: Entities subject to EU sanctions, bankruptcy, tax defaults, grave misconduct, fraud, corruption, or budget conditionality measures (e.g., Hungarian public interest trusts) are excluded.

Total Call Budget and Breakdown by Topic: The estimated total budget for the Call is €275,000,000.

• 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.

The final availability of funds is subject to 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 call 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 topic: up to €20,000,000.
  • For PE topic: up to €30,000,000.

Form of Funding and Reimbursement Rates:

Funding is provided as a Lump Sum grant based on an estimated project budget. Payment is made upon proper completion and delivery of Work Packages rather than reporting actual incurred costs.

• Baseline Funding Rate: 35% of the estimated eligible project budget. The remaining 65% must be co-financed by the consortium participants.
• Increased Funding Rates (Bonuses up to +15%): The reimbursement rate may increase up to 42.5% or 50% if eligible as a Priority Action:
  • +7.5% Bonus: If more than 50% of consortium beneficiaries are SMEs or mid-caps, or if the project is carried out by a SEAP, AND creates new cross-border cooperation between entities in EU Member States or EDIP associated countries.
  • +7.5% Bonus: If the action builds new infrastructure, new manufacturing sites, or ramps up capacity for crisis-relevant products.

Cost Category Rules and Limits:

• Physical & Cyber Protection Work Package: Includes counter-UAV protection, cybersecurity, and certification. The maximum EU grant contribution for this optional WP is limited to €500,000.
• Management and Coordination (WP1): Project management and coordination costs in WP1 should not exceed 10% of the total project cost.
• Direct Personnel Costs: Eligible. EU unit costs apply for SME owners and natural persons.
• Equipment and Machine Tools: Eligible at full acquisition cost.
• Subcontracting Costs: Must be performed exclusively in eligible countries. Subcontracting going beyond 30% of total eligible costs requires specific justification 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 (excluding VAT paid by public bodies acting as public authority).

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 or social media accounts is eligible).
• Costs for resources, equipment, or facilities located outside eligible countries.
• Double funding from other EU budget sources.

• Capacity Optimization and Expansion: Modernization, automation, repurposing of existing lines or establishing new production capacities; procurement and installation of machine tools and equipment.
• Cross-Border Partnerships: Building cross-border industrial partnerships (including SMEs and mid-caps), joint coordination of sourcing, component reservation, and raw material stockpiling.
• Surge Manufacturing Capacity: Establishing and maintaining reserved surge production capacities ready for rapid activation during demand spikes.
• Industrial Scale-up: Commercialization and industrial scale-up of defence developments, ramping up initial series production, and licensing production.
• Testing & Infrastructure: Establishing testing infrastructure, product reconditioning, certification, and addressing component obsolescence.
• Physical & Cyber Protection of Production (Optional WP): Site counter-UAV protection, network cyber hardening, compliance with NIS2 Directive, ISO/IEC 27001, IEC 62443, and EUCC certification.

• 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.
• February – May 2027 — Formal admissibility/eligibility checks and technical evaluation by the evaluation committee assisted by independent experts.
• June 2027 — Evaluation result letters sent to applicants (successful proposals invited for grant preparation; proposals passing threshold but lacking budget 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 completed no later than 31 December 2033.

Submission is done exclusively online via the EU Funding & Tenders Portal:

1. Registration: Create an EU Login account and register the organization in the Participant Register to obtain a 9-digit PIC code. Complete the Portal SME wizard (for SME/mid-cap bonus status).
2. Part A Form: Fill in administrative details and the budget online directly in the Electronic Submission System.
3. Technical Part B and Annexes: Download official templates, complete Part B (technical narrative, strictly maximum 70 pages PDF), and fill in all mandatory annexes.
4. Encryption and Upload: Assemble Part B and annexes into a single ZIP archive (under 100 MB), encrypt using AES-256 password protection, and upload to the Portal before the deadline.
5. Password Submission: Before 16 February 2027 (17:00 CET), send the decryption password to DEFIS-EDIP-PROPOSALS-PWD@ec.europa.eu stating Proposal ID and exact ZIP file name. Classified Information: Classified parts must NOT be uploaded online; delivery is arranged in advance via DEFIS-DEFENCE-SECURITY@ec.europa.eu.

Proposals are evaluated across 6 award criteria (scored 0 to 5 each). The total score is calculated using weighting factors up to a maximum of 60 weighted points. Overall pass threshold: 39 points out of 60.

• Objectives [Max 5 points, Weighting: 2 | Max Weighted Score: 10]: Alignment with call objectives and priorities; contribution to EDTIB competitiveness, resilience, and geographical distribution of capacity.
• Availability and security of supply in response to identified risks [Max 5 points, Weighting: 2 | Max Weighted Score: 10]: Ensuring uninterrupted supply of defence products in response to identified risks and conventional military threats.
• Cross-border cooperation, inclusion of SMEs and mid-caps, or the link with orders stemming from common procurement [Max 5 points, Weighting: 2 | Max Weighted Score: 10]: Development of cross-border industrial cooperation, involvement of SMEs/mid-caps, and alignment with common procurement orders.
• Expected results [Max 5 points, Weighting: 1 | Max Weighted Score: 5]: Compliance with expected call results and justification of project KPIs (throughput, yield/quality metrics).
• Production lead time, production capacity, reserved capacity and workforce skilled [Max 5 points, Weighting: 2 | Max Weighted Score: 10]: Reduction of production lead time, measurable increase in production capacity, establishment of reserved surge capacities, and workforce training.
• Implementation [Max 5 points, Weighting: 3 | Max Weighted Score: 15]: Quality and logic of the work plan and Work Packages, clarity of Milestones and Deliverables, risk management system, and resource allocation.

1. Application Form Part A: Administrative online form with participant details and summarized budget.
2. Application Form Part B: Technical project narrative (Word template uploaded as PDF, page limit: 70 pages).
3. Detailed Budget Table: Excel calculation sheet detailing cost categories to support lump sum estimates.
4. Participant Information: CVs of key staff, qualifications, and summaries of previous relevant projects.
5. List of Infrastructure, Facilities, Assets and Resources: Inventory of existing equipment, facilities, and workshops.
6. Ownership Control Declarations: Official declarations regarding ownership structure and absence of foreign control for each participant.
7. Procurement Strategy: Procurement strategy detailing component origin calculations proving non-EU imported component costs will not exceed 35%.
8. Declaration of Honour (DoH): Self-declaration of eligibility, financial/operational capacity, and absence of exclusion grounds.

• Progress Reports: Submitted every 6 to 12 months to monitor target achievement.
• Component Origin Reporting: Mandatory report supported by documentary evidence (contracts, customs declarations) to verify compliance with the 35% non-EU/EDIP associated country component cost ceiling.
• Lump Sum Delivery Proof: Grant funds for a Work Package are released only upon its full and proper completion in accordance with Annex 1.
• Security Compliance: Handling of classified information is governed by Council Decisions 2013/488/EU and 2015/444 and formalized through a project-specific Security Aspect Letter (SAL).
• Financial Compliance: Maintenance of primary accounting records; subject to checks and audits by EU bodies (DG DEFIS, OLAF, EPPO, ECA). Double funding and net profit generation (No-profit rule) are strictly prohibited.

The regulatory framework and legal conditions of the call are governed by EU Financial Regulation 2024/2509, Regulation (EU) 2025/2643 (EDIP Regulation), and the 2026–2027 EDIP Work Programme.

Primary Legal Conditions:

• Ownership and Control Restrictions: Participants (beneficiaries, affiliated entities, and associated partners) must be established and managed in EU Member States or EDIP associated countries. They must not be directly or indirectly controlled by non-associated third countries. Foreign control is permitted only upon providing officially approved government legal guarantees or proving completion of Foreign Direct Investment (FDI) screening under Regulation (EU) 2019/452.
• Design Authority: Participants must retain full technical and legal control over system architecture, specifications, interfaces, and source code of the defence product. Contracts, licenses, or legal veto rights by third-country entities that could restrict or block product modification or component substitution are prohibited.
• Component Origin Threshold: Non-EU/EDIP associated country imported component costs must remain below or equal to 35% of total component costs. Compliance is calculated in the Procurement Strategy and subject to regular reporting.
• Security Framework: Processing of classified data must comply strictly with Council Decisions 2013/488/EU and 2015/444. Participants must sign a Security Aspect Letter (SAL) integrated into the Grant Agreement.
• EU Restrictive Measures & Conditionality: Entities subject to EU sanctions (Article 29 TEU / Article 215 TFEU) or budget conditionality measures (Regulation 2020/2092, e.g., Hungarian public interest trusts) are strictly excluded from all consortium roles.
• IPR Rules and Non-Profit Rule: Project Intellectual Property remains with participants and cannot be transferred or exported outside EU/associated countries without approval. Grants are subject to the no-profit rule and no double funding prohibitions.