The European Union has approved its first long-term funding programme dedicated to defence manufacturing, joint procurement and supply chain expansion
The European Parliament has approved the European Defence Industry Programme (EDIP), clearing the EU’s first dedicated long-term funding scheme for defence manufacturing, joint procurement and industrial supply chains, with €1.5bn in grant funding through 2027.
The legislation passed with 457 votes in favour, 148 against and 33 abstentions, formally establishing a permanent legal framework to support cross-border defence production, factory expansion and supply chain resilience. Of the total budget, €300m is allocated to support Ukraine’s defence industry through a dedicated cooperation instrument.
Under EDIP’s so-called “Buy European” rules, at least 65% of components must be sourced from the EU or associated countries, limiting the share of inputs from non-associated third countries to 35% of total component value. The measure is designed to retain more defence spending within the European industrial base.
François-Xavier Bellamy, an MEP involved in negotiating the legislation, said the programme “will reverse the reliance on imports that prevailed in Europe.”
The programme replaces two temporary emergency measures introduced in 2023 — the ammunition production scheme ASAP and the joint procurement programme EDIRPA — both of which expire this year. Unlike those tools, EDIP runs as a multi-year industrial support framework and covers the full defence supply chain from research and manufacturing through to maintenance and disposal.
Ukraine will be integrated into the scheme through the €300m support instrument, allowing Ukrainian defence firms to participate in joint projects and access EU grant funding alongside member-state partners. Standard EDIP projects require participation from at least four EU countries, with Ukraine permitted as a partner.
The legislation also creates a new Fund to Accelerate Defence Supply Chain Transformation, seeded with at least €150m in additional contributions. During negotiations, the European Parliament unsuccessfully pushed to redirect €20bn from the separate €150bn SAFE defence lending facility into EDIP, arguing that grant funding remains insufficient relative to Europe’s rearmament needs.
“EDIP marks an important step towards a more efficient, faster and genuinely European approach to defence procurement,” said Marie-Agnes Strack-Zimmermann, chair of Parliament’s security and defence committee.
For contractors and investors, EDIP introduces predictable grant funding over three years targeted at production bottlenecks in ammunition, drones and critical defence components. T
The EU’s defence industrial base consists of large prime contractors, mid-sized manufacturers and more than 2,000 specialised SMEs, with an estimated combined annual turnover of roughly €70bn. While modest relative to Europe’s total defence spending, the programme establishes a permanent EU-level industrial funding mechanism for the first time.
The programme now moves to final formal endorsement by EU member states before entering into force following publication in the EU’s Official Journal.