The Ukraine Support Instrument: What It Means for Industry
Updated: 2 days ago
The European Defence Industry Programme creates a new type of EU–Ukraine defence cooperation.
Its Ukraine Support Instrument, or USI, has a dedicated budget of €300 million and is designed to support the recovery, reconstruction and modernisation of Ukraine’s Defence Technological and Industrial Base while connecting it more closely with the European Defence Technological and Industrial Base.
The practical focus is industrial.
USI supports production capacity, cross-border cooperation, manufacturing scale-up and the integration of Ukrainian companies into European defence supply chains.
For companies on both sides, this creates opportunities that look very different from a traditional collaborative R&D project.
Overview
Where USI Sits Inside EDIP
EDIP is the EU programme focused on defence industrial readiness.
Its 2026–2027 work programme has a total envelope of €1.5 billion and covers industrial reinforcement, common procurement, European Defence Projects of Common Interest, support for defence supply chains and cooperation with Ukraine.
Within this structure, the Ukraine Support Instrument receives €300 million.
Its objective is to increase the resilience and production capacity of Ukraine’s defence industry while building stronger industrial links with companies in EU Member States.
This matters because the EU–Ukraine relationship is moving deeper into industrial cooperation.
The policy direction now includes:
joint production;
integration of supply chains;
production scale-up;
common technology development;
procurement involving Ukrainian industry;
longer-term integration of Ukraine into the European defence industrial base.
The €300 Million Structure
The dedicated USI envelope is €300 million.
The 2026 EDIP Work Programme allocates €260 million to industrial reinforcement actions involving Ukrainian and EU companies.
A further €35.3 million from the USI supports BraveTech EU, the joint EU–Ukraine defence innovation initiative.
The industrial reinforcement component is therefore the largest part of the instrument.
Its focus is production.
That includes both increasing capacity inside Ukraine and developing cross-border manufacturing structures with European partners.
This creates a direct link between Ukrainian battlefield-driven technologies and the EU’s wider objective of expanding European defence production.
The Two Industrial Reinforcement Calls
The USI industrial reinforcement actions are divided into two major calls.
The first call has a budget of €180 million and a submission deadline of 13 October 2026.
It focuses on:
air-defence missiles and ammunition;
counter-UxS systems;
deep-strike capabilities, including long-range missiles;
rockets;
smart bombs;
loitering munitions;
related production capacity.
The maximum EU contribution is €30 million per project.
The second call has a budget of €80 million and a submission deadline of 16 February 2027.
It focuses on:
unmanned systems;
UxS interceptor variants;
EW-resilient unmanned systems;
counter-UxS systems;
EW-resilient supporting systems.
The maximum EU contribution is €10 million per project.
These calls show the practical orientation of the instrument.
The targeted areas are closely connected to capabilities that have become central to the war in Ukraine and to European defence readiness.
What Activities Can Be Funded
The EDIP framework allows USI industrial projects to request support for several types of activities.
Examples include:
joint filling plants;
new production lines;
reinforcement of existing production capacity;
enabling capacity needed for higher output;
scale-up of Ukrainian systems;
ready-to-use production lines;
Manufacturing as a Service;
conversion of dual-use heavy industry for defence production surge.
This creates room for different industrial models.
A project may focus on building new capacity.
Another may expand an existing production line.
A European company may contribute manufacturing technology, components, integration capacity or industrial infrastructure.
A Ukrainian company may bring an operationally validated product, existing production know-how or a system that needs to scale.
The strongest projects are likely to show how these contributions form one credible production architecture.
Funding Rates and Project Size
USI industrial reinforcement actions offer funding of up to 100% of eligible costs.
This is a major difference from several other EDIP industrial reinforcement calls, where lower co-financing rates may apply.
The higher rate reflects the strategic objective of rebuilding, modernising and integrating Ukraine’s defence industrial capacity during wartime.
It also means companies should pay close attention to the underlying eligibility and industrial-origin rules.
Funding intensity does not remove the need for a credible production case.
Applications need to show:
what capacity will be created;
where production will take place;
what output can realistically be delivered;
which partners are responsible for which industrial functions;
how the supply chain will operate;
how the investment supports European and Ukrainian defence readiness.
What This Means for Ukrainian Companies
For Ukrainian defence companies, USI creates a direct route into an EU industrial programme.
The opportunity is strongest for companies that already have:
operationally tested products;
real military demand;
production experience;
measurable output;
defined bottlenecks;
a clear reason for European industrial cooperation.
The programme can support companies moving from wartime production constraints towards larger and more resilient manufacturing structures.
It can also help Ukrainian companies become embedded in European supply chains.
That may happen through:
joint manufacturing;
component supply;
licensed production;
shared production infrastructure;
technology integration;
long-term industrial partnerships.
The strategic value can therefore extend beyond one grant.
A successful project can create an industrial relationship that continues through procurement, production and future capability programmes.
What This Means for EU Companies
For EU companies, USI provides a structured route to work with Ukrainian defence industry.
Ukraine offers capabilities that are especially valuable in areas where technology changes rapidly.
These include:
unmanned systems;
counter-UAS;
electronic warfare;
missiles and ammunition;
battlefield communications;
autonomy;
targeting;
fast product iteration.
European companies may contribute:
certified components;
production infrastructure;
supply-chain access;
manufacturing technology;
quality systems;
industrial engineering;
financing capacity;
access to European procurement structures.
The strongest partnerships will combine complementary industrial roles.
A consortium becomes more credible when every company can explain exactly why it is needed in the production chain.
BraveTech EU
The USI also supports BraveTech EU.
BraveTech EU is designed to connect the Ukrainian and European defence innovation ecosystems and accelerate technologies responding to urgent military needs.
The 2026 EDIP Work Programme allocates €35.3 million from the Ukraine Support Instrument to this initiative.
Its logic complements the larger industrial reinforcement actions.
USI-IRA focuses heavily on production and industrial scale.
BraveTech EU focuses on rapid innovation, testing and the connection of Ukrainian battlefield-driven technologies with European companies and institutions.
Together, they create two different entry routes:
industrial scale-up;
innovation cooperation.
Practical Company Action Plan
For a Ukrainian Company
Step 1 - Define the Production Bottleneck | Quantify what currently limits output. Examples may include: machinery; components; facilities; testing capacity; workforce; working capital;production engineering. |
Step 2 - Define the Industrial Objective | State clearly what the project changes. For example: 50 units per month → 200 units per month; Manual process → semi-automated line; Single-source component → resilient European supply chain. |
Step 3 - Identify the European Contribution | Find partners that solve a specific industrial problem. Avoid adding partners simply to complete the consortium structure. |
Step 4 - Prepare Production Evidence | Be ready with: current capacity; maximum capacity; lead times; bill-of-material dependencies; delivery history; defect and acceptance rates; existing military demand; scale-up timeline. |
Step 5 - Map Component Origin | EDIP places strong emphasis on European and associated-country industrial content. Supply-chain mapping should happen before consortium finalisation. |
For an EU Company
Step 1 - Identify Ukrainian Technologies With Demonstrated Operational Value | Focus on technologies with credible evidence of operational relevance. |
Step 2 - Define What Your Company Adds to Industrial Scale | Be specific about the industrial role. |
Step 3 - Assess Where Joint Production Can Take Place | Determine the most credible production structure and location. |
Step 4 - Identify Supply-Chain and IP Dependencies | Clarify critical components, ownership and technology-transfer requirements. |
Step 5 - Build a Production Plan Before the Proposal Narrative | Start with the industrial logic and numbers.Then build the application around them. |
For industry, the key question around USI is practical:
What production capability can the partnership create that neither side can deliver as effectively alone?
Companies that can answer that with real numbers, clear industrial roles and a credible scale-up plan are much closer to the logic of the instrument.
