EU: Foreign direct investment screening rules – update to list of projects & programmes of Union interest 

 

The EU Commission has published a draft act updating the list of projects under the foreign direct investment screening rules. 

Under Article 8 of the FDI Screening Regulation, the Commission must amend the above list of projects and programmes of Union interest. 

This concerns projects & programmes that: 

• entail a significant amount or share of EU funding 

• are covered by EU law regarding critical infrastructure, critical technologies or critical inputs essential for security or public order. 

The update takes into account developments since the last update (September 2021), e.g. new projects and programmes. 

Context of the delegated act: 

The primary objective of Regulation (EU) 2019/452 of the European Parliament and of the Council, which establishes a framework for the screening of foreign direct investments (FDI) into the Union, is to enhance the awareness of Member States and the European Commission regarding foreign investments that may pose risks to the Union’s security or public order. 

Articles 6 to 11 of the Regulation establish a cooperation mechanism that enables Member States and the European Commission to exchange information and provide comments on foreign direct investments that may have implications for the security or public order of more than one Member State. 

The Regulation also seeks to strengthen oversight of foreign investments affecting projects and programmes of Union interest. Accordingly, Article 8 empowers the Commission to issue an opinion where it considers that an FDI is likely to adversely affect such projects or programmes on grounds of security or public order. These opinions are communicated to all Member States. Under Article 8(3), projects and programmes of Union interest include those that receive substantial Union funding or are governed by Union legislation relating to critical infrastructure, critical technologies, or critical inputs that are essential for security or public order. The Regulation contains an annex listing these projects and programmes, which may be updated by the Commission through delegated acts in accordance with Article 8(4). 

On 24 January 2024, the Commission proposed the repeal and replacement of the Regulation. Following the completion of the legislative process, the revised Foreign Investment Screening Regulation is scheduled to apply from 17 January 2028. 

In light of developments since the previous update of the Annex on 29 September 2021, several additional projects and programmes have been identified as meeting the criteria set out in Article 8(3) and are therefore proposed for inclusion in the Annex to the Regulation. 

Among these is the Strategic Technologies for Europe Platform (STEP), which aims to strengthen European industrial competitiveness and accelerate investment in critical technologies. The STEP Regulation consolidates and coordinates funding across eleven EU programmes, including Horizon Europe, the European Defence Fund, and the European Regional Development Fund, with investments focused on three strategic areas: digital technologies and deep-tech innovation, clean and resource-efficient technologies, and biotechnology. 

The EU Secure Connectivity Programme (IRIS²) is an initiative established to develop a resilient and secure satellite communication system for the European Union. The programme aims to strengthen cybersecurity, ensure secure and reliable communication for governments and critical infrastructure, and improve connectivity across the Union, including in remote and underserved regions. It complements existing EU space programmes, such as Galileo and Copernicus, by providing secure and encrypted communication services. In doing so, it seeks to reduce dependence on non-EU service providers, reinforce Europe’s digital sovereignty, and enhance its capacity to respond effectively to crises. Funding for the programme is drawn from multiple EU sources, including the EU Secure Connectivity budget, Horizon Europe, InvestEU, contributions from the European Space Agency, and private-sector investment through a public-private partnership framework. 

The Act in Support of Ammunition Production (ASAP), adopted in 2023, is an EU initiative intended to increase the production capacity of ammunition and missiles to address supply shortages, particularly those arising from the conflict in Ukraine. The initiative provides financial assistance to European defence manufacturers, strengthens critical supply chains, and facilitates faster procurement procedures. It forms part of the EU’s broader strategy to enhance defence preparedness, reduce dependence on external suppliers, and support the implementation of the Strategic Compass for Security and Defence by enabling Member States to replenish defence stocks and provide assistance to partner countries during crises. 

The European Defence Industry Reinforcement through Common Procurement Act (EDIRPA), approved in 2023, seeks to strengthen the European defence industrial base by encouraging the joint procurement of defence equipment by Member States. The initiative promotes greater coordination in defence expenditure, reduces market fragmentation, and facilitates the timely and efficient acquisition of military capabilities. By fostering collaborative procurement, particularly in response to urgent security requirements, EDIRPA contributes to reducing strategic dependence on external suppliers while enhancing the resilience and competitiveness of the European defence industry. 

The Security Action for Europe (SAFE), implemented through the Reinforcement of the European Defence Industry Instrument and adopted in May 2025, is intended to support Member States in investing in defence industrial production through joint procurement, with a particular emphasis on developing priority defence capabilities. 

Strategic investments undertaken in accordance with Article 2(10) of the InvestEU Investment Guidelines (Delegated Regulation (EU) 2021/1078), excluding Section 6.4.1.1 relating to social investments and skills, are designed to enhance the European Union’s competitiveness and resilience. These investments facilitate financing for projects that reduce strategic dependencies, strengthen supply chain security, and support critical sectors of the internal market. 

Strategic projects approved by the European Commission under the Critical Raw Materials Act (CRMA) also contribute to these objectives. The CRMA identifies critical raw materials that are indispensable to the EU economy and essential for a broad range of strategic technologies and industries, including aerospace and defence, thereby reinforcing the Union’s economic security and industrial resilience. 

The Net Zero Industry Act, adopted in June 2024, seeks to strengthen the competitiveness and resilience of the European Union’s net-zero technology manufacturing ecosystem by promoting strategic projects, expanding clean technology production capacity, and reducing strategic dependencies across clean technology value chains. 

Similarly, Important Projects of Common European Interest (IPCEIs), established under Article 107(3)(b) of the Treaty on the Functioning of the European Union (TFEU) and the Commission Communication on IPCEIs, enhance the Union’s industrial competitiveness and resilience by supporting cross-border strategic investments and reducing dependencies in critical sectors. 

The Innovation Fund is intended to accelerate the deployment of technologies that contribute to the decarbonisation of European industry. It provides financial support for projects involving innovative low-carbon technologies and processes in energy-intensive industries, renewable energy generation, energy storage, and other clean technologies. Investments in these sectors may also give rise to risks affecting the Union’s security and public order, particularly cybersecurity vulnerabilities arising from supply chain dependencies. In addition, the Innovation Fund increasingly supports innovative projects across the critical raw materials value chain, consistent with the objectives of the RESourceEU Action Plan, in recognition of the growing strategic importance of these sectors and the associated security risks. 

The Integrated Border Management Fund, including through the Customs Control Equipment Instrument, supports Member States by enabling the acquisition and deployment of advanced customs control equipment. However, a risk assessment conducted by the NIS2 Cooperation Group has identified potential vulnerabilities in this sector, particularly relating to cybersecurity threats and access to sensitive data. These risks are further intensified by significant dependencies on a limited number of suppliers. 

The European Defence Industry Programme (EDIP), adopted in December 2025, is an EU initiative aimed at reinforcing the European defence industrial base and ensuring the timely availability of defence products across Member States. EDIP seeks to improve the responsiveness, resilience, and competitiveness of the European defence sector by encouraging cooperation among Member States, supporting joint defence projects and investments, and consolidating demand to enable more efficient production and procurement processes. The programme also aims to reduce strategic dependencies on external suppliers and strengthen the European Union’s capacity for autonomous action in defence matters. 

In parallel, certain projects and programmes are proposed for removal from the list annexed to the Regulation, as they are no longer considered relevant due to their completion or the expiration of their legal frameworks following the previous update of the Annex on 29 September 2021. These include: 

• Trans-European Networks for Telecommunications; and 

• Preparatory Action on Defence Research. 

Additionally, the following initiatives are proposed for removal as their respective legal bases have been repealed by Regulation (EU) 2021/696 establishing the EU Space Programme. Since the relevant activities are already incorporated within the scope of the EU Space Programme and covered under the existing Annex, separate listing is no longer necessary: 

• European GNSS programmes, including Galileo and EGNOS; 

• Copernicus; and 

• Preparatory Action for the new EU GOVSATCOM programme.