Publication date: March 21, 2025
The European Defence Industry Programme (EDIP) is a strategic initiative of the European Union aimed at strengthening the European defence technological and industrial base (European Defence Defense Technological and Industrial Base (EDTIB). EDIP is a continuation of previous programmes such as the European Defence Fund (EDF) and the European Defence Industrial Development Programme (EDIDP). This programme was developed in response to the growing security challenges in Europe and the need to increase the strategic autonomy of the European Union. EDIP supports the development of advanced defence technologies, increases the competitiveness of the defence sector in the EU and promotes cross-border cooperation between Member States in the field of military research, development and production. Its overarching objective is to create conditions for increasing the defence capabilities of EU countries while ensuring a more efficient use of financial and technological resources[1].
The assumptions of EDIP are:
The European Defence Technological and Industrial Base (EDTIB) isis a collection of companies, research institutions and other entities located in the EU Member States that participate in the production, research and development of defence technologies and equipment. Its aim is to ensure the European Union’s strategic independence in the field of defence by developing and maintaining industrial and technological capabilities enabling the production of modern military equipment[2].
The assumptions for long-term strengthening of production readiness and supply potential from the EU technological and industrial base focus on[3]:
The EDTIB covers companies and institutions located in EU Member States and associated countries such as Norway. To become part of the EDTIB, companies must meet certain criteria, such as[4].
Non-EU entities can participate in projects financed by EDIP only to a limited extent and if specific requirements are met, e.g. by participating in consortia with EU entities.
Legal acts regulating EDIP
The legal basis for the European Defence Industrial Development Programme (EDIDP), the predecessor of the EDIP, is Regulation (EU) 2018/1092 of the European Parliament and of the Council of 18 July 2018. Work is currently underway on a new regulation establishing the EDIP, which is intended to ensure the continuation and expansion of support for the European defence industry in the period 2025-2027.
Information Day of the Polish Ministry of Development and Technology
On January 30, 2025 a meeting was held organized by the Ministry of Development and Technology under the title “industry and the EU structure of the development of the defense sector – conditions, needs, opportunities”. This meeting was a space where entrepreneurs operating in economic sectors related to defense technology could speak about European initiatives aimed at strengthening European potential in the field of defense technology, as well as listen to a presentation on this topic prepared by the Ministry. During the meeting, an expert panel was also held, where representatives of the Ministry of National Defense, Ministry of Finance, Ministry of State Assets, Industrial Development Agency, Persons serving in the Permanent Representation of the Republic of Poland in Brussels, as well as a representative of Employers of the Republic of Poland presented their views.
Financial issues
During the meeting, entrepreneurs primarily raised the issue that financing the development of innovative projects in the defense sector is one of the greatest challenges for companies operating in this industry. This applies in particular to the early stages of design, which are often not covered by standard support mechanisms. The long waiting time for decisions on funding – up to 12 months – means that companies are forced to suspend work on new technologies. This situation not only slows down the development of companies, but also negatively affects the competitiveness of the entire sector and the state’s ability to modernize its armed forces. One of the reasons for the difficulties in financing innovative projects is the dominance of the contract production model in the defense industry. Companies often adapt their activities to specific government orders, which means that the development of new technologies takes place only when there is a specific demand for them. However, there is a lack of flexible mechanisms for financing projects that may only become useful in the future. Additionally, administrative procedures related to the allocation of funds for research and development in the defense industry are often complicated and time-consuming. The need to meet a number of formal requirements, obtain certification and comply with national and EU regulations means that companies cannot respond quickly to changing market needs.
The European Union recognizes the problem of financing innovation in the defense industry and is taking action to solve it. Programs such as Challenges and DisruptiveTechnologies , are aimed at supporting projects with a high level of risk, but at the same time with great breakthrough potential. They enable financing of research and development works already at the conceptual stage, which allows for accelerating the process of implementing new technologies. Another important initiative is the European Defence Innovation Programme. Defense Innovation Scheme – EUDIS), which is aimed primarily at startups and small and medium-sized enterprises. This program is an opportunity for companies that do not have sufficient resources to finance the development of new technologies on their own. Under EUDIS, they can obtain financial and expert support, which increases their chances of implementing innovative solutions on the market.
In the opinion of the participants, Poland, as a NATO and EU frontline country, should strive to make maximum use of available European funds for the development of the defense industry. In the face of the growing geopolitical threat, it is crucial to increase investment in new military technologies and develop a domestic production base, but in order to effectively use the available funds, it is necessary to streamline national administrative procedures and increase the capabilities of the Polish defense sector. This means, among others:
Some of the meeting participants took the position that the current model of financing innovation in the defense industry requires reforms that will adapt it to the dynamically changing geopolitical and technological situation. The key question, however, is: what specific regulatory changes could speed up the decision-making process and facilitate access to financing.
Possible solutions include:
Another issue related to European support for the defence industry is the European Investment Bank, or more precisely, the level of financing that the Bank provides by providing loans for the development of the defence technology sector to European companies operating in this industry. Currently, it is around 30-35%, which is moderate support, especially compared to other sectors, such as infrastructure investments. During negotiations, it is worth seeking to increase it in order to create more attractive conditions for companies developing modern defence technologies. Another important issue is the role of the European Investment Bank (EIB), which, through its agencies, including the European Investment Fund, offers various financial instruments, such as loan guarantees under programs such as InvestEU. In the green transformation sector, it is possible to obtain up to 80% guarantees for loans and credits, which significantly facilitates access to financing, especially for small and medium-sized enterprises. Unfortunately, this type of support does not currently cover the defence industry, because the EIB’s policy on this issue remains conservative. Including the Department of Defence Industry in the debate at the EU level could contribute to changing this approach. If financial institutions in the Member States were able to use EU guarantees to finance defence projects, this would increase their interest in supporting this industry. In such a model, the Industrial Development Agency, the National Economy Bank or their counterparts in other countries could cooperate with the EIB, signing agreements enabling the distribution of funds with appropriate security. Such mechanisms could significantly accelerate the development of innovation in the defence sector, reducing the risk for financial institutions and facilitating companies’ access to capital. In order for the EDIP to be more effective, it is necessary to take into account the wide distribution of funds, which would allow for greater involvement of national banks and development institutions in financing innovative projects in the defence industry.
Cooperation of Polish enterprises
As part of the Employers of Poland initiative, the challenge of creating a platform for understanding entrepreneurs and enterprises was taken up, in order to support Polish companies – both small and medium-sized ones, as well as the largest entities operating in the defence sector. It is also crucial to include international companies that have been operating in Poland for years, employing thousands of employees and cooperating with Polish suppliers. Small enterprises can find information on available programs, medium-sized enterprises will receive assistance in entering international supply chains, and large corporations will have access to Polish subcontractors. In the opinion of the representative of Employers of Poland, these activities are a response to the changing geopolitical realities in the world, during which the Polish defence industry must be strong and competitive to determine the country’s strength on the international stage.
EDIP and the functioning of the Polish defence industry within NATO structures.
In the broader context of combining participation in EDIP with Poland’s functioning in NATO, the representative of the Ministry of National Defense presented. EDIP is just one of the instruments that can support the process of implementing areas that are important for the development of the Polish armed forces. EDIP provides for instruments such as the European Armaments Cooperation Structure, which assumes cooperation at the level of member states. Another part of EDIP is joint purchases of arms, which is the implementation of the EDIRPA regulation. EDIP provides a chance to enter into EU initiatives and defense cooperation in the European Union, but Poland gives priority to action in accordance with the determinants defined by NATO standards . From the perspective of the Ministry of National Defense, EDIP also introduces controversial issues such as the introduction of regulations regarding member states and industrial entities themselves. The Ministry of National Defense also cares about a strong defense industry, which is why it encourages Polish entrepreneurs to consult.
Conclusions of the Ministry of Agriculture and Rural Development after the previous project calls and the needs
In the second part of the meeting, the participants had the opportunity to listen to the meeting leader’s statement on the conclusions drawn in the Ministry of Development and Technology.
One of the key problems identified in the report is the difficulty in moving from the prototype stage to the practical application of EDF research results in the armed forces. Few projects have actually been implemented for military use. This is particularly important considering that EDF covers over 30 different technological areas that are considered to be key to the defence needs of EU Member States. The European Commission draws attention to the need to increase the involvement of Member States in financing projects after the competitions have ended. The first projects under EDF are currently being implemented, but earlier initiatives such as PADR (scientific research projects) and EDIDP (implementation projects) show that financial support at later stages is crucial for the success of the projects. Although the overall assessment of EDF is positive, the report indicates certain shortcomings, especially in the context of the representation of domestic defence industries. From the Polish perspective, the participation of domestic companies in EDF programmes is disproportionate to the potential of the sector. In addition, small and medium-sized enterprises (SMEs) encounter difficulties in accessing funds and creating international consortia, which is a condition for participation in EDF. One of the important topics raised in the report is the need for greater support for NATO’s eastern flank countries, including Poland and the Baltic countries. It points to the need for additional financial bonuses for strategic projects that can increase the region’s security. In the context of sanctions on Russia and growing trade tensions with China and the BRICS countries, ensuring stable supply chains is becoming crucial. The European Commission is taking action in this area, monitoring potential raw material deficits and cooperating with experts to ensure Europe’s independence in access to strategic resources.
Polish investment zone – an instrument supporting entrepreneurs
The Polish Investment Zone, operating since 2018, is an instrument created for entrepreneurs who want to invest in Poland and thanks to this instrument, these entrepreneurs can obtain tax exemption, which can translate into lower operating costs and improve the speed and potential of the company’s development. Such support is addressed not only to foreign entities but also to Polish companies. It differs from Special Economic Zones in that such support can be obtained throughout Poland and not only in designated zones. In the context of the arms sector, such support can significantly contribute to its competitiveness. Tax exemption is possible in cases where:
In order to obtain a decision on support that entitles the company to receive such relief, it must:
The highest support can be obtained in the provinces of Eastern Poland, where it amounts to 50%, but it should be noted that in the case of medium-sized enterprises, this support is increased by 10 percentage points, and small and micro-entrepreneurs can count on support of 20 percentage points, which in some cases means that the share of public funds in the project will be as much as 70%. In the case of Warsaw and the so-called Warsaw subregion, support is 0% and in this region, a decision on support for the implementation of a new investment cannot be obtained.
Minimum costs that an entrepreneur must incur to obtain a decision on support. The amount depends on the size of the entrepreneur and the location of the investment. Higher outlays are required in the case of regions with a higher unemployment rate.
Regardless of the unemployment level in a given district, the entrepreneur must in each case provide 25% of the investment costs from his own funds free from any public support.
The entrepreneur must earn the appropriate number of points to be granted support. Their number depends on the intensity of the support before. The higher the intensity, the fewer of these criteria are required. The qualitative criteria are divided into two groups – criteria for sustainable economic development and criteria for sustainable social development. Currently, however, the production of weapons and ammunition and the production of explosives are excluded from the possibility of support within the Polish Investment Zone.
After meeting all these conditions, the company can receive a decision on support. It is issued for 12 to 15 years, depending on the location of the investment and the intensity of support in a given region. This means that during this time the entrepreneur has to implement the investment and can use the tax exemption.
Support instruments for small and medium-sized enterprises
COSME – a programme for which the Department of Small and Medium-sized Enterprises is responsible, aimed at providing entrepreneurs with access to integrated services offered by the Enterprise Europe Network in the field of innovation, internationalisation, digitalisation and the green economy, as well as improving access to external financing for SMEs and increasing the use of EU instruments financed by Polish financial institutions and enterprises.
European Enterprise Network (EEN) – this is a support network for small and medium-sized enterprises. Its aim is to help companies introduce innovations and develop their activities on foreign markets. In Poland, the coordinator of the network is the Polish Agency for Enterprise Development. The network also brings together companies operating in the field of security and defense policy, which enables companies from this sector to internalize companies, provide advice on entry, participate in fairs, missions; this involves, for example, free trips to such fairs. A special Aerospace and Defense group has also been established. Sector Group is a working group of institutions working for clients in the defence and aerospace sectors. This group also advises on funding from the European Defense Fund.
Partnership Opportunities Database – an international database of cooperation offers run by the European Commission, containing profiles of companies operating within the EEN. Thanks to it, entrepreneurs have the opportunity to establish business contacts with foreign manufacturers, distributors, sales representatives and subcontractors. The database also contains offers of cooperation, searching for business partners and cooperation in the field of research and development. Within this database, entrepreneurs have the opportunity to create a profile by filling in an application form sent to the appropriate territorial EEN centre[5].
National Contact Point for EU financial instruments – This institution offers support in accessing EU funding for companies and institutions, promoting available programmes and facilitating their use[6].
SME Development Center – deals with providing financing from EU funds, and also provides knowledge and information on the development of SMEs. As part of the SME Development Center, activities are provided in the field of knowledge, information and inspiration. In the field of knowledge, it is the PARP Academy. The PARP Academy is 78 courses for entrepreneurs held online. It is dedicated to the SME sector, large entrepreneurs, or people planning to start their own business. The Academy has been operating since 2019. The courses are carried out in the scope of five thematic blocks, i.e. law, finance, management, marketing, competences. As part of PARP, webinars and conferences are also conducted , and access to publications in the form of articles is provided.
[1]https://www.europarl.europa.eu/factsheets/pl/sheet/65/przemysl-obronny
[2]https://www.pism.pl/publikacje/piersza-strategia-przemyslu-obronnego-ue
[3]https://www.gov.pl/web/rozwoj-technologia/ Europejski-fundusz-obronny-mozliwosci-wspolpracy
[4]https://www.kpk.gov.pl/inne-programy/europe-fundusz-obronny
[5]https://www.een.org.pl/een/baza
[6]https://www.parp.gov.pl/component/site/site/punkt-kontaktowy-ds-instrumentow-finansowych-ue