EDIP: the 35 % rule on component origin
The European Defence Industry Programme (EDIP), Regulation (EU) 2025/2643, funds defence procurement and new production capacity. Its Article 10 caps the cost of components from outside the Union and associated countries at 35 %, so at least 65 % of component cost comes from inside them.
- Who it covers
- Recipients of Union funding: legal entities established in the Union or an associated country, with their executive management structures there (Regulation (EU) 2025/2643 (EDIP), Article 9(1)1. Only legal entities established in the Union or in an associated country and having their executive management structures in the Union or in an associated country shall be eligible to be recipients of Union funding under this Regulation.), and not controlled by a non-associated third country (Regulation (EU) 2025/2643 (EDIP), Article 9(5)5. Recipients of Union funding under the Programme shall not be subject to control by a non-associated third country or by a non-associated third-country entity.).
- The limit
- For procurement under Articles 11, 13 and 35, components originating outside the set may cost no more than 35 % of the estimated cost of the components of the end product (Regulation (EU) 2025/2643 (EDIP), Article 10(3)3. For procurement carried out pursuant to Articles 11, 13 and 35 which is supported by Union funding, the cost of components originating outside the Union and associated countries shall not be higher than 35 % of the estimated cost of the components of the end product. No component shall be sourced from third countries that contravene the security and defence interests of the Union and its Member States.). For actions that increase production capacity, the base is the product whose capacity the funding increases (Regulation (EU) 2025/2643 (EDIP), Article 10(4)4. For actions carried out pursuant to Article 12 and activities carried out pursuant to Article 35 other than procurement activities, the cost of components originating outside the Union and associated countries shall not be higher than 35 % of the estimated cost of the components of the product the increase in production capacity of which is supported by Union funding. No component of the product the increase in production capacity of which is supported by Union funding shall be sourced from third countries that contravene the security and defence interests of the Union and its Member States.). The call documents accept either of two calculation methods, and the condition holds for the whole action (EDIP call document EDF-EDIP-P-2026-LS-IRA, Version 1.2, component origin, page 10The component origin eligibility criterion will be considered met if either of the following two calculation methods are complied with: a) if the costs of tier 1 procured components originating outside the EU or EDIP associated countries divided by the estimated costs of all tier 1 procured components of the product whose production capacity is being increased, independently of their origin remains below or equal to 35% (i.e. only counting procured components) OR b) if the costs of tier-1 procured components originating outside the EU or EDIP associated countries divided by the cost of components of the defence product remains below or equal to 35% (i.e. also counting total manufacturing costs (TMC) at the level of subsystems built in-house together with the cost of the tier-1 procured components ready to be integrated directly in the product whose production capacity is being increased until (but excluding) the last manufacturing process ahead of the packaging and quality control) The condition must be complied with during the entire duration of the action.).
- European under EDIP
- The EU Member States and the associated countries: the members of the European Free Trade Association in the European Economic Area that apply the regulation (Regulation (EU) 2025/2643 (EDIP), Article 2(3)‘associated countries’ means members of the European Free Trade Association which are members of the European Economic Area that apply this Regulation in accordance with the Agreement on the European Economic Area;). Ukraine is outside the set, except in calls of the Ukraine Support Instrument, which count the EU and Ukraine (EDIP call document EDF-EDIP-USI-2026-LS-IRA, component originComponent origin — The cost of components originating outside the EU and Ukraine must not be higher than 35% of the estimated costs of the components of the product whose increase in production capacity is supported. No component may be sourced from third countries that contravene the security and defence interests of the EU and its Member States.).
- Evidence
- For a component imported into the set, the origin is the one in the customs documents or purchase contracts; for one bought inside it, the country of its last substantial processing (EDIP call document EDF-EDIP-P-2026-LS-IRA, Version 1.2, origin of components, page 9The ‘origin of components’ must be established as follows: − for imported components into the EU or EDIP associated countries, the origin must be the one documented in the customs documents or purchase contracts, defined in accordance with relevant customs laws4 − for components procured in the EU or EDIP associated countries5, the origin is the country where the component underwent its last substantial, economically justified processing or working, in an undertaking equipped for that purpose and resulting in the manufacture of a new product or representing an important stage of manufacture, in compliance the definition in the EU Customs Code.). A report on the origin of the components used is a mandatory deliverable, with supporting evidence such as tendering or contracting documents if the granting authority asks (EDIP call document EDF-EDIP-P-2026-LS-IRA, Version 1.2, mandatory deliverables, page 23The following deliverables will be mandatory for all projects: − progress reports (every 6 to 12 months, to be agreed during grant agreement preparation) − reporting on the origin of components used (with supporting evidence, e.g. tendering or contracting elements, if required by the granting authority)).
Based on the official text of Regulation (EU) 2025/2643 and its call documents, checked 12 October 2026. Not legal advice. Not yet expert reviewed.
Every EDIP condition with its article text: EDIP on the Rules page.