EDIP USI: €300M EU grants for Ukraine’s defence industry

The European Commission has opened calls under EDIP Ukraine Support Instrument (USI) – €300 million to rebuild, modernise and scale up Ukraine’s defence industrial base. The first call opens in June 2026, with a submission deadline of 13 October 2026.

The programme operates under EU Regulation 2025/2643 and forms part of the broader European Defence Industry Programme (EDIP), which carries a €1.5 billion budget for 2025–2027. Notably, Ukraine is the only non-EU country with dedicated EDIP calls and up to 100% cost coverage – a benefit the EU extends to no other partner.

Three funding components of USI

USI allocates its €300 million across three blocks. The largest is Industrial Reinforcement Actions (IRAs) at €260 million – two calls for Ukraine–EU cross-border collaboration, with the European Commission managing both. Because this block targets production capacity rather than procurement, applicants use the funding to build, scale or convert manufacturing capacity.

The second block is BraveTech EU / Brave1 at €35.3 million – approximately 170 grants of up to €200,000 each, coordinated by the Brave1 platform and focused on start-ups and SMEs. Specifically, supported projects must enter at TRL 4 and exit at TRL 7. The third block (€4 million) covers programme administration.

For defence manufacturers, the first two blocks are the key entry points. Both cover up to 100% of eligible costs – a benefit the EU extends exclusively to Ukraine among all non-EU EDIP participants.

Eligibility: who can participate

An applicant company must satisfy all of the following requirements simultaneously. Ownership and control must rest with Ukrainian or EU legal entities. The company must register and/or conduct manufacturing activities in Ukraine or the EU. The applicant must also hold IP rights and product design control in Ukraine or the EU (with exceptions under Article 26 of the Regulation).

On components: at least 65% of the product’s value must originate from Ukraine or the EU, so third-country components cannot exceed 35%. Components from EU-sanctioned countries are excluded entirely. Consequently, the applicant bears responsibility for documenting all eligibility criteria. Failing the 65% rule or sourcing from sanctioned countries will lower the application’s score or disqualify it.

Two IRA calls: MAB and CUXS

Call 1 – Missiles, Ammunition & Bombs (EDF-EDIP-USI-2026-LS-IRA-MAB). Budget: €180 million. Grant size: €2–30 million per project. Submission window: June 2026 – 13 October 2026. Target products: air defence systems, missiles and ammunition, deep-strike capabilities, rockets, guided bombs and loitering munitions. Target capacities: joint ammunition production facilities, production line scaling, Manufacturing as a Service (MaaS), heavy industry conversion for dual-use.

Call 2 – Unmanned & Counter-Unmanned Systems (EDF-EDIP-USI-2027-LS-IRA-CUXS). Budget: €80 million. Grant size: €2–10 million per project. Submission window: June 2026 – 16 February 2027. Target products: swarm UxS (including FPV), EW-resistant variants, fibre-optic guidance, counter-UxS systems, anti-drone EW. Target capacities: joint production lines, UA system scaling, MaaS.

Both calls require cross-border collaboration between Ukrainian and European companies. Grants use a lump-sum format – the budget is fixed at grant agreement signing, with payments tied to milestones. Cost overruns fall on the company. So the European Commission, not the Ukrainian Ministry of Defence, selects and evaluates all projects.

How to prepare a strong IRA application

EDIP IRA funds the closure of a specific production gap to meet confirmed demand. The Commission’s key evaluation question is: will this funding produce more output, faster – to the front? So the application must answer that question with verifiable numbers.

A strong application follows four steps. First, confirm demand: name a specific buyer (the Ukrainian MoD, an allied ministry, an EU integrator) and document the volume in writing via an LOI, MoU or pre-contract, including a procurement timeline. Second, identify the gap: state the current verified monthly output against the volume needed, and name the specific bottleneck – assembly, processing, testing, or tooling.

Third, calculate CAPEX: equipment, tooling, and infrastructure with prices from actual suppliers, not cost estimates. Include a realistic procurement and commissioning schedule. Fourth, project KPIs: monthly output after investment, lead time reduction, trained staff volumes, and reserve capacity. Each KPI needs a baseline figure before and a target after.

Common weak points in applications: no documented demand proof, a vaguely stated bottleneck, personnel as the main budget line rather than equipment, and a EU partner who only adds a signature. A budget structured primarily as CAPEX consistently scores higher.

Specifically, the window between call opening and the deadline is for filing a prepared application, not for gathering materials from scratch. Preparation should start now.