Strengthening innovative power, remaining competitive
Priorities of German industry for the next Research Framework Programme and the European Competitiveness Fund
Executive Summary
13 January 2026
Europe is at a crossroads: climate change, technological change, geopolitical conflicts and demographic challenges are profoundly changing our society and economy. At the same time, the innovation gap between Europe and the US and China continues to grow. Europe's innovative capacity is declining, as Mario Draghi and Manuel Heitor have shown and made clear in their reports: To ensure that Europe remains self-determined and economically strong in the future, competitiveness and the promotion of innovation must be at the heart of the European economic agenda, and more money must be invested in research and innovation. The BDI welcomes the fact that the next research framework programme and the European Competitiveness Fund are intended to strengthen Europe's competitiveness. For the upcoming negotiations, German industry recommends the following measures:
Policy recommendations at a glance:
▪ Budget and financing: German industry is calling for significant budget increases through appropriate prioritisation in the next multiannual financial framework for research and innovation in order to secure Europe's innovative strength and global competitiveness. The total budget for the 10th EU Framework Programme for Research and Innovation should amount to EUR 200 billion, with an increase in Pillar 2 to at least 56% of the total budget in order to close Europe's innovation gap in the transition from industry to research.
▪ Industrial orientation and strategic focus: In terms of programme design, industry is calling for a stronger focus on applied research with industry-driven priorities and a clear focus on economic scaling. The interlinking of FP10 and ECF should be clearly defined, and national and European measures must be more closely interlinked.
▪ European partnerships and cooperation: European partnerships should be more industry-led and remain innovation- and results-oriented, without mandatory financial contributions from companies. Cooperation with associated and like-minded third countries is indispensable for key technologies.
▪ Intellectual property and technological sovereignty: The free and secure handling of intellectual property is central to technological sovereignty and global competitiveness. Export restrictions or overregulation jeopardise investments and international cooperation.
▪ Simplification: There needs to be a genuine simplification of funding instruments: shorter procedures, less bureaucracy, clear rules and planning security for companies. Only then can FP10 and ECF fully realise their potential to strengthen European industry
Budget and financing
As part of the ongoing negotiations, there should be no cuts to the budgets for the next Framework Programme for Research (FP10) and the European Competitiveness Fund (ECF). Instead, the total budget of EUR 200 billion for research and innovation proposed in the Draghi report should be targeted for FP10, and additional funds should be allocated to research and innovation. At least the proposed €175 billion should be available for the implementation of the Research Framework Programme from 2028 onwards (Art. 6). At the same time, there needs to be a proportionately significant increase in funding for Pillar 2, as its share has fallen to €75 billion, or 43% of the total budget, compared with 56% in FP9. This does not do justice to the importance of transferring knowledge into industrial applications and thus strengthening competitiveness. The BDI recommends raising the budget share of Pillar 2 to at least the level of 56% in FP9. Europe's innovation gap can only be closed efficiently and effectively if investments in R&I in research and industry are coordinated
In order to ensure high industry participation even in high-risk, low technology readiness levels (TRL) and at the same time create optimal financing conditions, no blanket limit of 70% should be introduced on the eligibility of direct plus indirect costs. Instead, the established funding rate of 100% plus indirect costs should be maintained for activities with lower TRLs so that companies can engage with technologies that are not yet mature at an early stage
If the future research framework programme supports measures with a dual-use component, it is necessary to establish transparent and clear rules on the use and allocation of funds in order to ensure the targeted and efficient use of resources and planning security for companies, and to make additional funds available for these projects. The link between FP10, ECF and defence-related activities in the areas of research and capability development must be clarified in this context. There should be no duplication of structures for supporting companies of all sizes in the field of defence research. German industry recommends ensuring close coordination between the relevant stakeholders in order to achieve spillover effects that meet demand. The Commission must bring the issue of research security to the fore
Industrial orientation and strategic focus
Both the Competitiveness Fund and the Research Framework Programme must contribute to economic scaling. The simplification of the EU funding structure envisaged in the ECF proposal is to be welcomed in principle. The planned bundling of existing programmes, uniform rules and centralised digital access can help to make access to EU funding more transparent, efficient and user-friendly. To this end, it is necessary to design FP10 and the ECF in such a way that economic scaling is actually possible. The political objectives of the ECF should be technology-neutral and defined in close consultation with industry. Only through industry-driven priorities can it be ensured that the ECF makes a real contribution to the competitiveness of European industry. The BDI therefore recommends creating an additional ‘window’ for industrial technologies to enable the development of industrial solutions for scaling key technologies and key enabling technologies. This will be made possible by a technology-neutral and cross-sector funding area that creates systemic innovations across the board while ensuring the independent development and production of new technologies in Europe.
The definition of ‘policy windows’ in the proposal for the European Competitiveness Fund rightly aims to focus resources on the EU's strategic priorities and policy objectives. However, particularly with regard to the adoption of these priorities in FP10, there is a risk that fundamental, horizontal key and future technologies and their cross-sectoral and cross-policy significance will not receive sufficient attention and that synergies will be lost. Industrial cross-cutting technologies (advanced materials, advanced manufacturing, industrial AI, semiconductors, robotics, quantum and data technologies) and industrial solutions for scaling process technologies and deep tech should therefore be bundled and coordinated in a separate, industry-led cross-cutting priority
Furthermore, a clear and consistent definition of the interlinking of the ECF and FP10 is required. It must be explained in a comprehensible manner how the individual instruments of the ECF are linked to FP10, how synergies between the two programmes work and how they can be used efficiently. Since a significant portion of the funds earmarked for ‘competitiveness’ are intended for purposes (related to defence policy) that have not yet been defined in detail, it is important that the ECF, in its further development, remains clearly focused on economic impact, strategic coherence and the strengthening of key European technologies and key enabling technologies. In addition, an increased budget for Pillar 2 in FP10 should be used to strengthen an effective and industry-driven perspective in Pillar 2, with a focus on commercial applications, strategic market positions and economic scalability. Co-financing from European and national funds should be facilitated. In any case, this should be accompanied by a reduction in bureaucratic and formal hurdles for grant recipients, both when applying for funds and when implementing projects, which are currently extremely high in programmes such as EFRE and IPCEI
It should be ensured that, in addition to research infrastructures, technology infrastructures in particular are also promoted. In doing so, attention should always be paid to meeting the high demand for European competitiveness and social significance in applied research projects. Companies of all sizes must continue to be given prominent consideration within the ECF and FP10, as they play a decisive role in the industrial implementation and scaling of innovations. The focus should therefore be increasingly on applied research in the future. In addition, priorities should be set in line with market needs. Rapid access to grants for small and medium-sized enterprises (SMEs) and mid-caps must be facilitated
Regarding so-called ‘moonshots’, their definition and strategic role within FP10 need to be clearly clarified. Moonshots should not be stand-alone instruments and should not replace existing funding instruments or partnerships. Rather, they should be understood as a conceptual and procedural element –without their own budget and without institutional duplication but clearly contributing to the achievement of European sovereignty goals. In addition, moonshots should only be pursued if they are evidencebased and based on realistic goals. Close coordination with national initiatives such as the High-Tech Agenda in Germany must be ensured.
German industry recommends completing previous missions that were funded under FP9 and not continuing them in their current form under FP10
Close coordination with Member States should be ensured with regard to national research and innovation funding. Work programmes, targeted actions and accelerated actions must be clearly defined and structured in a comprehensible manner to ensure planning security for companies. The involvement of industry in programme committees and expert groups must be maintained, as before, to ensure an inclusive and transparent process
European partnerships and cooperation
European partnerships have proven to be an important factor for success in the past, which is why they should be continued. Collaborative research is a key factor for successful innovation ecosystems in Europe. Collaborative research should therefore be strengthened. European partnerships should continue to be clearly innovation- and results-oriented and should continue to be implemented without direct financial contributions from companies (‘in-cash contributions’) (Art. 11, FP10). Such financial in-cash contributions would significantly limit industry participation and lead to fewer incentives for participation in the future. Partnerships should not be seen as an end in
themselves, but as a tool for promoting innovation. Their success is not measured by their mere existence, but by whether they produce concrete technological advances and marketable solutions. The introduction of mandatory financial contributions from industry would undermine the core idea of partnerships and weaken the principle of shared responsibility, as industry contributes significant self-financing to projects on a topic-specific basis
Industry should play a leading role in shaping and steering partnerships. This requires less detailed specifications from the European Commission and greater involvement of companies in governance structures to enable practical, competition-oriented results. Only industry-led processes can ensure that research results are translated more quickly into marketable applications and made available for use in Europe.
In addition, the administratively burdensome reporting on ‘in-kind contributions to operational activities’ (IKOP) and ‘in-kind contributions to additional activities’ (IKAA) should be significantly reduced or abolished, as these entail double reporting obligations for all partners and lead to disproportionate additional expenditure. The activities reported under IKOP and IKAA are already documented by processes within the companies, which is why double reporting does not provide any additional benefit
Greater clarification is needed regarding cooperation with companies and research institutes from third countries in the partnerships. Europe must not isolate itself in the field of research and innovation but should continue to work with like-minded partner countries. Many key technologies – for example in the fields of semiconductors, hydrogen, aviation, quantum technologies, AI, advanced materials and biotech – can only be successfully developed in close cooperation with global partners. European companies are therefore dependent on access to the relevant skills and infrastructure – strategic partner countries may, for example, have unique, large-scale test facilities that are essential for the experimental validation of disruptive technologies, as well as important expertise with strong engineering and research teams. Maintaining a holistic approach from the start of the next research framework programme is therefore essential in order to compete with other parts of the world Longstanding partner countries should therefore not be regarded as competitors within the framework of the EU preference policy (Art. 10, ECF). Instead, a partnership should be established that creates mutual benefits and strengthens European innovation. At the same time, the risk of knowledge leakage from publicly funded research to companies in non-partner countries must be minimised and academic freedom must be reconciled with security policy interests. The BDI recommends developing an interest-driven, consistent and reliable strategy for cooperation with associated states and likeminded countries in order to further strengthen research security in the EU and international cooperation
Within European partnerships, Important Projects of Common European Interest (IPCEIs) play a key role in successful innovation ecosystems in Europe. It is welcome news that individual projects that are part of an IPCEI will also be eligible for co-financing through the ECF in future – for example, to increase the participation of SMEs or to achieve broader geographical coverage. We therefore recommend supplementing IPCEIs with additional funds from the ECF and closely integrating them with the ECF. This would further accelerate the scaling of strategically relevant technologies and strengthen research, development and industrial application. When designing IPCEIs, the focus must always be on strengthening the competitiveness of European industry. However, the complexity and duration of the current IPCEI application processes and the processes during project implementation place a considerable burden on companies and deter small and medium-sized enterprises (SMEs) in particular. In this context, IPCEIs must therefore be accelerated, simplified and de-bureaucratised in order to deliver real added value for the innovative strength of European industry.
Intellectual property and technological sovereignty
German industry welcomes the fact that the ECF is intended to contribute specifically to strengthening the EU's technological and economic sovereignty. The funding conditions set out in Article 10 of the ECF can be a suitable instrument for this purpose, provided that they are applied in a targeted and proportionate manner and are limited to cases justified in security policy or strategic grounds. However, excessive localisation of requirements – for example, in terms of production sites, supply chains or ownership structures – would be critical, especially where the strength of globally active European
companies is based on globally diversified supply chains and their own sites outside Europe. The competitiveness of such companies would be weakened by restrictions under Article 10 (ECF) on ‘EU preference’, thereby directly jeopardising the intended success of the ECF
The free and secure global transfer of intellectual property (IP) is a key prerequisite for international cooperation, successful market access and the strengthening of European innovation, and thus makes a decisive contribution to Europe's technological sovereignty. The EU should therefore focus more strongly on the industrialisation of intellectual property. Only if IP is systematically converted into economic value creation can the EU achieve long-term technological leadership and secure its technological sovereignty – this will not isolate Europe but will enable it to act independently in key technologies while remaining open to international cooperation
The restrictions on IP exports planned by the European Commission would therefore severely limit digital business models and European competitiveness. European companies operate globally and need to be able to exploit IP outside the EU, provided that this does not conflict with generally applicable export control regulations. Restricting IP to the European area would significantly impair innovation, growth and international partnerships, thereby limiting the global competitiveness of European companies. Article 10 (ECF) must not lead to excessive restrictions on the transfer of results and technology outside the EU. The application of Article 10 (ECF) carries additional potential for significant bureaucratic hurdles and must therefore be carefully weighed against the interests of European companies on a case-by-case basis Experience from IPCEI projects shows that European companies find it very difficult to use their expertise at their non-European sites due to the need for individual approvals. Blanket bans and complex and lengthy individual approvals cause significant competitive disadvantages for globally active companies based in the EU. In order to give companies the necessary planning security, it should continue to be possible to integrate manufacturing and development sites in non-EU countries into companies in a simplified manner, and transfers within companies should be easier in future. At the same time, it should be ensured that ownership of IP in Europe is not lost. Access to IP should also only be granted if it is actually necessary for the implementation of joint projects
With regard to the European institutions' access to and use of results in the ECF (Articles 54 and 81), German industry warns that these requirements, as a general condition for funding, could lead to critical assets or know-how falling into the hands of competitors, which would undermine the principle of competitiveness in the internal market. Such conditions would further reduce the attractiveness of the instrument and could potentially lead to innovations developed in Europe being financed by third countries
German industry recommends retaining the principle of necessity for background knowledge, setting appropriate limits for access rights and enabling low IP management costs. In order to avoid contradictions and ensure consistency between funding instruments, the rules on IP in FP10 and ECF should also be harmonised. Legal clarity and guidelines on IP management, particularly in mixed financing or partnership projects, can minimise administrative effort and legal risks. In addition, we recommend that the definitions of ‘eligible’ and ‘ineligible third countries’ intended in Article 10 of the ECF be clearly listed in a transparent manner and regularly reviewed to ensure that they are up to date. Eligible countries should be treated as EU countries in projects and processes in accordance with Article 10 of the ECF
Simplification
The momentum generated by the European Commission's simplification agenda and the demands made in the reports by Mario Draghi and Manuel Heitor should be used to enable a significant simplification of the upcoming research framework programme – this includes simplifying reporting, fewer binding projects, faster procedures and shorter approval times through accelerated evaluation and simplified requirements. However, project durations must also be adapted more flexibly to the development cycles of the respective technology fields in order to keep pace with market developments – this is necessary in the case of shortened development cycles for some technologies, as well as very long development cycles for highly complex technologies. The combinability of funding instruments
and targeted support throughout the entire investment cycle is a positive sign against the backdrop of long-standing demands for less bureaucracy, better coordination and scaling. However, it will be crucial that the announced simplifications actually have a noticeable effect in practice. Only if procedures are truly streamlined and accelerated can the ECF fully realise its potential to strengthen competitiveness.
However, simplifications should be made with a sense of proportion. There must be no room for uncertainty or interpretation. Such uncertainties arise in particular when the European Commission is given too much leeway in designing work programmes. Companies need a clear understanding of how work programmes actually function and how they can implement their projects reliably and predictably and should therefore play a leading role in shaping the programmes. In this context, the BDI recommends defining binding approval and award criteria
The blanket use of lump sums should be viewed critically from an industry perspective. In particular, the complexity of lump sum mechanisms makes it difficult to submit applications and settle accounts and stands in the way of the desired increase in participation. The practice of settling accounts for hours actually worked on the basis of standard accounting practices at national level should be continued. Overall, the complexity of applications has increased significantly in recent years. Effective simplification must therefore reduce the actual burden on applicants – not create new administrative hurdles. Open calls by default also offer potential for simplification and technology neutrality but are not always the most suitable option and should therefore not be used as standard without considering the context
Another key issue is a clearer definition and consistent implementation of the Single Rulebook –close integration of both programmes must be ensured in order to avoid duplication of structures and guarantee efficient use of funds. In addition, the Competitiveness Coordination Tool should make a concrete contribution to simplification
Impressum
Bundesverband der Deutschen Industrie e.V. (BDI)
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Editorial
Lukas Martin
Senior Representative Innovation, Security and Technology
T: +3227921017
L.Martin@bdi.eu
BDI Document number: D 2214