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Defence Industry Development Grants Program - Sovereign Industrial Priorities Stream

Defence Industry Development Grants Program – Sovereign Industrial Priorities Stream

  • The grant value is between $50,000 and $1,000,000, covering up to 50% of eligible project costs
  • Applications are accepted on a rolling basis and reviewed in batches about every three months
  • Applications are open until 30 June 2030
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The Defence Industry Development Grants Program (DIDG) awards grants over six years from 2024–25 to 2029–30, with $249.1 million in total funding. It was announced in the Defence Industry Development Strategy on 29 February 2024 and extended by the Defence Industry Development Strategy 2026, released on 2 July 2026. The program aims to build the industrial base Australia needs to achieve Defence outcomes in areas of strategic priority.

The program funds four grant streams: Sovereign Industrial Priorities, Skilling, Exports, and Quality & Security.

The Sovereign Industrial Priorities Stream helps small and medium enterprises (SMEs) buy industrial or technical plant and equipment. The equipment must be used directly to make or deliver defence products and services named in the Strategy's Detailed Sovereign Defence Industrial Priorities.

About $190 million is available for this stream, including about $12 million for projects that support Australia's Nuclear-Powered Submarine (NPS) program. Defence can move funding between streams so the strongest applications are funded.

Key Requirements

The program aims to:

  • develop a more capable, resilient and competitive Australian defence industry that supports Defence outcomes in areas of strategic priority
  • help build the industry workforce needed for priority defence capabilities, now and in the future
  • support exports that strengthen the Australian defence industrial base
  • uplift the security of the Australian defence industrial base

Grants cover up to 50% of eligible project costs, and projects must have at least $100,000 in eligible expenditure. Funding is capped at $3 million per business (ABN) in any three-year period. Your share of the costs can’t come from other government funding. If your business or group receives funding from the NRF or the Defence Industry Growth Facility, you must declare it and confirm it won’t pay for the same work.

Applications must identify at least one capability element sub-component that your business supplies, or is preparing to supply, as listed in the Detailed Sovereign Defence Industrial Priorities. Projects linked to “Grow” or “Guide” priorities are favoured over “Monitor” priorities. Mature products and established customer relationships are also favoured. You’ll need a letter of support from Defence or your defence industry customer. NPS applicants should include a letter of support from the Australian Submarine Agency.

For grants over $100,000, you must confirm that an external accountant can declare you’re able to fund your share of the project. Any grant offer will depend on providing that declaration.

The intended outcomes are more capability and capacity in Australian defence industry, an industry that can scale up quickly when Defence needs it, and a more resilient, competitive and innovative defence sector.

The Sovereign Industrial Priorities Stream grant opportunity guidelines explain the eligible and ineligible costs and prioritisation rules in full.

What is eligible for funding?

Projects must support one or more of the Defence Industry Development Strategy 2026 priorities:

  • Maintenance, repair, overhaul and upgrade of Australian Defence Force aircraft
  • Continuous naval shipbuilding and sustainment
  • Sustainment and enhancement of the combined-arms land system
  • Domestic manufacture of guided weapons, explosive ordnance and munitions
  • Development and integration of autonomous systems
  • Integration and enhancement of battlespace awareness and management systems
  • Test and evaluation, certification and systems assurance

Eligible activities are buying, leasing, building, installing or commissioning industrial or technical plant and equipment used directly for defence work. This includes:

  • specialist software needed to run the equipment
  • design, engineering and commissioning needed to get the equipment working
  • staff training and accreditation for the funded equipment
  • building changes needed to install the equipment, as long as they aren’t the largest cost in the project

To be eligible, a project must:

  • have at least $100,000 in eligible expenditure
  • be carried out in Australia
  • run for no more than 24 months
  • be completed by 31 March 2030
  • not be funded by other government sources

The grant can’t pay for labour, product certification or testing, R&D, prototyping, standalone tooling, software development, inventory, marketing, security clearances, secure facilities, office equipment, vehicles, rent or maintenance. Some of these, such as security clearances and secure facilities, are covered by other DIDG streams. If more than half of the budget is ineligible, the whole application is rejected.

What companies are eligible for funding?

Applicants must:

  • be an SME with fewer than 200 employees
  • have an ABN and be registered for GST
  • have an account with an Australian financial institution
  • not be exempt from income tax

Your organisation must be one of the following:

  • an entity incorporated in Australia
  • a company limited by guarantee
  • an incorporated trustee on behalf of a trust

Joint applications are accepted if all partners contribute financially. One lead organisation submits the application and signs the grant agreement.

Sole traders, partnerships, trusts (unless applying through an incorporated trustee), unincorporated associations, overseas organisations and government bodies can’t apply.

Is this grant competitive or entitlement based?

Competitive. Your application will be assessed among other applications by a judging panel.

How can I increase my chances of winning this grant?

By engaging a professional government grant writer consultant. Avant Group is Australia’s largest independent grants advisory firm. Find out more about our government grant writing and consulting service here. 

How can I get help understanding if I’m eligible for this grant? Or know if I’m likely to win funding?

Avant Group offers a no-obligation assessment of your eligibility for funding and will assess your likelihood of a successful grant application.