SMEs and Regional Clusters in Europe’s Defence Industry

The amended cohesion regulation places strong emphasis on the role of small and medium-sized enterprises (SMEs) and regional clusters in strengthening Europe’s defence capacities. Recital (8) explicitly directs Member States to prioritise projects that promote “employment, skills development and industrial diversification at regional level,” highlighting SMEs and clusters active in dual-use technologies, cybersecurity and artificial intelligence. This provision elevates local innovation ecosystems to a central position within the Union’s defence agenda. It represents a deliberate shift from concentrating resources exclusively in large defence contractors towards a more distributed and inclusive model of industrial development. By formally acknowledging SMEs as key contributors to security, the EU creates pathways for local entrepreneurs, research centres and technology hubs to integrate into defence value chains. This approach broadens participation in the defence sector and strengthens the strategic autonomy of the Union through a diversified industrial base.