EU Commission proposes first five European Defence Projects of Common Interest: major opportunities for defence, aerospace and SpaceTech companies

On 3 July 2026, the European Commission proposed the first five European Defence Projects of Common Interest ("EDPCIs") under the European Defence Industry Programme ("EDIP"), established by Regulation (EU) 2025/2643. The projects cover drones and counter-drone systems, maritime and seabed defence, space, air and missile defence, and security of the EU's Eastern Flank. With a combined funding ambition of around EUR 190 billion by 2036, the EDPCIs represent the most significant collaborative European defence-industrial initiative to date. The Commission has allocated EUR 325 million from the EUR 1.5 billion EDIP budget to support their establishment and deployment.

On average, 18 Member States participate in each project. Ukraine participates in four of the five projects, and Norway may also participate. The proposal is not yet final: the Council must now deliberate on the formal establishment of the EDPCIs. Once adopted, the projects become eligible for EU funding through EDIP and potentially further support under the future European Competitiveness Fund.

1. What has been proposed?

The five projects are:

DronE and Counter Drone – European Resolve (DECODER)

• Focus: Development, scaling and deployment of interoperable European drone and counter-drone capabilities, including a European network of drone technology hubs. Involves 26 EU Member States, Norway and Ukraine.
• Estimated financial size: EUR 3.5–5 billion by 2033

Integrated Maritime and Seabed Defence (IMSD)

• Focus: Maritime domain awareness, naval combat, maritime interdiction, underwater and seabed warfare, and protection of ports, offshore installations, cables and pipelines.
• Estimated financial size: EUR 43–72 billion by 2045

SPACE

• Focus: Space-based early warning, SATCOM, ISR/SIGINT, space domain awareness, PNT/NAVWAR, responsive space systems and potentially multi-mission constellations.
• Estimated financial size: up to EUR 24 billion by 2034

EU Federated Integrated Air and Missile Defence including Early Warning (EU-FIAMD)

• Focus: Federated air and missile defence, early warning, sensors, effectors, C2, testing, certification and training environments. Involves 16 participating countries.
• Estimated financial size: EUR 55–80 billion by 2040

Eastern Flank Watch (EFW)

• Focus: Multi-domain security of the EU’s Eastern border, including ground combat, drone defence, C4ISTAR, counter-mobility, military mobility and air and missile defence. Involves 13 EU Member States, Norway and Ukraine.
• Estimated financial size: EUR 60–100 billion by 2036

The five projects were selected from nine proposals submitted by Member States by 29 May 2026. They aim to strengthen the European Defence Technological and Industrial Base ("EDTIB"), support collaborative development and procurement, and improve interoperability across Member States. The projects are described as fully aligned with EU and NATO capability priorities.

2. Why this matters for industry

The EDPCI initiative is designed to shape European defence capability development and procurement over the next decade. For industry, early positioning in the relevant value chains may be decisive.

The opportunities are particularly relevant for:

• Prime contractors and system integrators that can coordinate multinational capability projects, align national requirements and manage complex procurement structures across participating countries.
• SMEs, mid-caps and scale-ups with technologies in sensors, autonomy, AI, secure communications, cyber resilience, electronic warfare, space systems, drone platforms, counter-UAS, underwater systems and manufacturing technologies. The Commission's BraveTechEU initiative under EDIP specifically targets start-ups and SMEs.
• Space and New Space companies providing satellite communications, Earth observation, ISR, space domain awareness, responsive launch, PNT resilience or ground-segment services. The SPACE EDPCI alone envisages investment of up to EUR 24 billion by 2034.
• Dual-use technology providers that can adapt civilian products for defence use, especially in drones, maritime surveillance, AI-enabled decision support, robotics and critical infrastructure protection.
• Investors and strategic partners looking at European defence and SpaceTech targets, as EDPCI-related funding may increase demand visibility and accelerate consolidation in selected segments.

3. Key legal aspects for companies

3.1 Funding eligibility and European control

EDIP funding is subject to strict eligibility rules. Recipients must generally be established in the EU or an associated country and have their executive management structures there. Relevant infrastructure, facilities and resources must also be located in the EU or an associated country, subject to limited exceptions.

Companies controlled by non-associated third countries may still be eligible if adequate guarantees are provided, including safeguards on infrastructure, IP, know-how and classified information.

For companies with US, UK, Swiss or other non-EU parent structures, this requires a careful assessment of whether the eligibility thresholds can be met and what guarantees will be required.

3.2 Supply chain origin and “design authority”

For procurement and EDPCI activities supported by Union funding, the cost of components originating outside the EU and associated countries must generally not exceed 35 % of the component cost of the end product. In addition, no component may be sourced from third countries that contravene EU or Member State security and defence interests.

A further key concept is design authority: recipients or contractors must be able to decide on the definition, adaptation and evolution of the design without restrictions by non-associated third countries, including the authority to substitute or remove restricted components. This is particularly relevant for companies whose products incorporate US-origin ITAR- or EAR-controlled technology.

3.3 Procurement structures and consortium governance

Common procurement actions may involve contracting authorities of Member States, associated countries, international organisations, SEAPs or the European Defence Agency. Participating countries must appoint a procurement agent by unanimity, and the procurement agreement must address tender assessment and award decision-making.

For companies, early contractual structuring is essential: teaming agreements, consortium agreements, subcontracting structures, workshare, IP, export-control responsibility, security obligations, pricing and termination rights should be clarified before tenders or funding applications are launched.

3.4 IP, know-how and classified information

The EDIP rules expressly address IP and sensitive information. Guarantees may be required to ensure that IP and know-how needed for the action are not restricted by third-country control, and that access by non-associated third countries or entities to classified or sensitive information is prevented.

Companies should therefore review ownership structures, licence agreements, ITAR/EAR exposure, technical assistance arrangements, cloud hosting, employee access rights and security-clearance requirements well before joining an EDPCI supply chain.

3.5 Export control, sanctions and intra-EU transfers

Defence and dual-use technologies in the proposed projects will often be subject to EU, German and foreign export-control rules, particularly for space-based ISR, secure communications, counter-drone systems, electronic warfare, missile-defence components and AI-enabled targeting support. EDIP also contemplates general transfer licences for transfers of related products to other Member States.

3.6 State aid, competition and public funding compliance

Member States may provide support schemes to EDPCIs, but this remains without prejudice to Articles 107 and 108 TFEU. Companies should treat EDPCI participation as a public-funding and State-aid-sensitive environment, particularly where national, EU and regional funding instruments are combined.

Competition law also remains relevant. Consortium discussions should be structured carefully to avoid unlawful information exchange, market allocation or bid coordination beyond what is necessary for the project.

3.7 Permitting, facilities and industrial ramp-up

The EDPCI framework supports industrial ramp-up and production capacity. Planning, construction and operation of related production facilities may, under certain conditions, be considered an imperative reason of overriding public interest under selected EU environmental rules. This may assist permitting strategies but is not a blanket exemption from environmental, planning or safety requirements.

4. Ukraine and Norway participation

Ukraine participates in four of the five EDPCIs, supported by the EDIP Ukraine Support Instrument (USI) with EUR 260 million for collaborative projects. Norway's participation opens the framework to a key NATO ally with significant defence-industrial capacity.

5. Practical next steps for companies

Companies active in defence, aerospace and SpaceTech should now assess where their products, technologies or services fit into the five proposed EDPCIs. In particular, companies should:
a. map their capabilities against the five projects and likely national capability priorities;
b. identify potential prime contractors, Member State sponsors, procurement agents and consortium partners;
c. review ownership, control, security-clearance and third-country dependency issues against EDIP eligibility requirements;
d. audit supply chains against the 35% non-EU/non-associated component threshold;
e. review IP, design-authority and licensing restrictions, particularly for ITAR/EAR-exposed technology;
f. prepare compliant teaming, subcontracting and consortium documentation;
g. assess export-control, sanctions, FDI, cybersecurity, AI, data and public-procurement implications;
h. confirm Germany's participation status in each relevant EDPCI; and
i. monitor the Council deliberation process and upcoming EDIP funding procedures (first call closing October 2026, second call closing February 2027).

6. Summary

The Commission's proposal is a clear signal that Europe intends to move from fragmented national procurement towards larger, collaborative industrial programmes with a combined investment ambition of around EUR 190 billion. For companies in the defence, aerospace and SpaceTech sectors, the window for strategic positioning is opening now.