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European Defence Industry Programme: Council ready to start negotiations with the European Parliament

European Council / Council of the European Union

Council of the EU
Press release
23 June 2025 17:55

Today, member state representatives (Coreper) adopted a mandate for negotiations with the European Parliament on the proposal to establish the European Defence Industry Programme and a framework of measures to ensure the timely availability and supply of defence products (EDIP).

EDIP aims to enhance the readiness of the EU's defence industry by strengthening the competitiveness of the European Defence Technological and Industrial Base (EDTIB) and its ability to adjust to structural changes required by the evolving security landscape. In particular, the EDIP will boost cooperation in defence procurement, improve and accelerate the ability of defence industry supply chains to adapt, facilitate cross-border cooperation, increase manufacturing capacities and reduce lead production time for defence products, thereby addressing existing capability gaps. Furthermore, it will contribute to the reconstruction and modernisation of the Ukrainian Defence Technological and Industrial Base, with a view to its future integration into the EDTIB.

Today, the Council sends a clear message: the EU is stepping up defence readiness. The EDIP will boost cooperation between member states, strengthen our industry, and support both EU defence capabilities and long-term preparedness.

- Adam Szłapka - Polish Minister for the European Union

Main elements of the negotiating position

Through the EDIP, the EU will provide €1.5 billion in the form of grants by 31 December 2027. Out of this budget, the European Defence Industrial Programme ("the Programme") will benefit from a total of €1.2 billion, and the Ukraine Support Instrument €300 million.

The Programme

The Council's mandate clarifies which actions will be eligible for funding under the EDIP:

• common procurement actions carried out by at least three countries (of which at least two must be member states), including for the establishment and maintenance of defence industry readiness pools
• industrial reinforcement actions, consisting of activities aimed at speeding up the ramp-up of the production capacity of defence products
• supporting actions, including activities to increase interoperability and interchangeability, and activities to facilitate access to the defence market for SMEs, mid-caps and start-ups
• the deployment of European Defence Projects of Common Interest,aimed at developing capabilities, including those securing access to strategic domains, strategic enablers and systems forming European defence infrastructure of common interest and use

In order to boost the competitiveness of the EU defence industry and in line with the decisions taken under SAFE (the Security Action for Europe instrument), the Council has agreed that the cost of components originating outside the EU and associated countries (EEA states) does not exceed 35% of the estimated cost of the components of the end-product.

The Council has also agreed that no components will be sourced from non-associated countries that contravene the security and defence interests of the EU or its member states.

Lastly, the Council makes the 'design authority' requirement the default rule. This will ensure that the EU maintains control over the design and development of its defence products. This is particularly important in light of potential supply chain disruptions or restrictions imposed by non-EU countries. Exceptions will apply to actions related to increasing the production capacity for ammunition and missiles, given that such products need to be available urgently and in large numbers.

Ukraine Support Instrument

The Council position fully embraces the objective of the Commission proposal to allow the EU to further support Ukraine through the Ukraine Support Instrument, thereby involving the Ukrainian defence industry in the instrument from the start.

Furthermore, the Council position clarifies the legal text of the instrument, ensuring that actions eligible for funding under the Ukraine Support Instrument adopt similar forms, criteria and conditions as those eligible for funding under the Programme, but include components and defence products originating from Ukraine and legal entities established and having their executive management structures in Ukraine.

Structure for European Armament Programme (SEAP)

The Council position furthermore aligns to the Commission proposal for a voluntary legal framework to foster long-term cooperation between member states throughout the entire lifecycle of a defence product. Among others, the SEAP will cover standardised procedures for initiating and managing cooperative programmes. It also offers a VAT exemption for equipment procured under this framework.

Security of supply (SOS)

The EDIP also sets up the first-ever security of supply regime in the area of defence, designed to ensure timely, reliable and autonomous access to defence products and components during crises.

The SOS chapter aims to strengthen the EU's resilience of supply chains of critical defence inputs and to promote coordination among member states. The Council position ensures solidarity between member states, while taking into account the specific characteristics of the defence sector and member states' national prerogatives in that field.

In order to ensure a robust governance of the process, the Council proposes to set up a Defence Security of Supply Board, composed of member states, the Commission, the High Representative and the European Defence Agency.

On the basis of constant monitoring and exchange of information, the Board will be able to coordinate preventive actions and, in some cases, trigger activation of the supply crisis state and specific measures to ensure continuity of supply and to protect the internal market.

Next steps

The agreement on the Council's negotiating mandate allows the presidency to start negotiations with the European Parliament.

Background

On 11 March 2022, the Heads of State or Government of the EU, meeting in Versailles, gave a commitment to "bolster European defence capabilities". They agreed to increase their defence expenditure, step up cooperation through joint projects and common procurement of defence capabilities, close shortfalls, boost innovation and strengthen and develop the EU defence industry.

On 5 March 2024, the Commission tabled a proposal for a regulation establishing the EDIP. Endowed with a financial package of €1.5 bn for the period from 2025 to 2027, the proposal for an EDIP is designed to build on existing programmes aimed at incentivising the common procurement of defence products (the EDIRPA Regulation) and the reinforcement of defence industry manufacturing capacities (the ASAP Regulation), giving them a longer-term and more structured perspective.

The European Council conclusions of June 2024 called on the Council, the member states, the Commission and the High Representative to take work forward on all strands, and in particular on critical shortfalls, on the basis of the Capability Development Plan and the proposal for a European Defence Industry Programme.

In its conclusions of 6 March 2025, the European Council stressed that Europe must become more sovereign, more responsible for its own defence and better equipped to act and to deal autonomously with immediate and future challenges and threats. At that European Council, all member states committed to strengthening their overall defence readiness and to reducing strategic dependencies, while addressing critical shortfalls and strengthening the EDTIB accordingly, so that the EU is in a position to better supply equipment in the quantities and at the accelerated pace needed.

On 27 May 2025, the Council adopted SAFE, a new EU financial instrument to support, by means of loans, those member states that wish to invest in defence industry production through common procurement, focusing on priority capabilities, and as a matter of urgency.