List of figures  4

Executive summary  5

List of abbreviations  6

1. Introduction  7

1.1 Scope of analysis  8

1.1.1 Research questions  8

1.1.2 Methodology  9

1.1.3 Structure of the study  9

2 Structural barriers facing SMEs in defence  9

2.1 Understanding SMEs and internationalisation  11

2.2 Barriers and constraints facing SMEs in the EDTIB  13

2.2.1 Financial barriers and constraints  15

2.2.2 Regulatory barriers and constraints  16

2.2.3 Political barriers and constraints  17

2.2.4 The two 'Valleys of Death'  18

3 EU policy instruments and SME integration  19

3.1 European Defence Fund  20

3.1.1 EU Defence Innovation Scheme  24

3.1.2 BraveTech EU  24

3.2 Programme for Agile and Rapid Defence Innovation  25

3.3 European Defence Industry Programme  26

3.3.1 Fund to Accelerate Defence Supply Chain Transformation  27

3.4 EU Defence Equity Facility  27

3.5 Hub for EU Defence Innovation  28

3.6 SAFE instrument  29

3.7 Defence Omnibus  29

3.8 European Innovation Council  30

3.9 Concluding observations on EU initiatives  32

3.9.1 The European Competitiveness Fund and SMEs  33

4 From innovation to production: Policy gaps and choices  34

4.1 Lessons from Ukraine  34

4.1.1 Implications for the EU and national procurement systems  35

4.2 Testing and certification  37

4.2.1 Proposals for new EU financial and legal tools for testing and certification  39

5 Conclusion  40

5.1 Policy recommendations  41

References  43