Defence Industry Development Grants Program (DIDGP)

Purpose and Program Overview

The Defence Industry Development Grants Program (DIDG Program) provides funding to small and medium enterprises (SMEs) and eligible defence industry associations to build Australia’s sovereign industrial capability, enhance global competitiveness and support national security outcomes in priority defence areas. The program operates over four years from 2024–25 to 2027–28 and was established under the Defence Industry Development Strategy to develop the industrial base needed to meet Defence outcomes in strategic priority areas.

Total funding available under the program is now $169.1 million, including an additional $15.5 million specifically allocated to projects that support Australia’s Nuclear‑Powered Submarine (NPS) program across all four streams. The grants help eligible businesses to acquire and commission new capability, secure international accreditations, build workforce skills, and improve security posture so they can better deliver against Sovereign Defence Industrial Priorities and access domestic and export defence opportunities.

Key Grant Details

• Grant amount per application: from $5,000 up to $1,000,000, depending on stream.
• Typical stream caps: Sovereign Industrial Priorities up to $1,000,000; Skilling up to $250,000; Exports up to $250,000; Security up to $100,000.
• Total program funding pool: $169.1 million across 2024–25 to 2027–28.
• Co‑contribution: Grants cover up to 50% of eligible project expenditure (minimum 50% cash contribution required from the applicant and partners).
• Application status: Open; applications accepted at any time while the opportunity remains open and are assessed in batches.
• Current batch closing dates:
  • Sovereign Industrial Priorities: 28 February 2026, 11:59 pm AEDT.
  • Skilling: 31 January 2026, 11:59 pm AEDT.
  • Exports: 31 January 2026, 11:59 pm AEDT.
  • Security: 28 February 2026, 11:59 pm AEDT.
• Eligible entities: Australian SMEs (less than 200 employees) and Defence Industry Associations (Skilling only), meeting specific registration and tax conditions.
• Location: Businesses located in Australia; eligible across all states and territories (ACT, NSW, VIC, SA, WA, QLD, NT, TAS and Administered Territories).

Priority Sectors

The program targets the Australian defence industrial base in areas aligned with the Sovereign Defence Industrial Priorities (SDIPs) identified in the Defence Industry Development Strategy. It also prioritises projects that support the Nuclear‑Powered Submarine program, with additional dedicated funding and a requirement for an Australian Submarine Agency Letter of Support for NPS‑related applications.

More broadly, the program supports Australian defence SMEs and associated defence industry associations operating in capability priority areas and supply chains that contribute to Defence outcomes. Applicants must demonstrate a strong link between their project and one or more SDIPs, and NPS‑focused applicants must evidence alignment with NPS‑related priorities.

Funding Scope

• Minimum and maximum grant amounts:
  • Overall program range: $5,000 to $1,000,000 per grant, subject to stream‑specific caps.
  • Sovereign Industrial Priorities stream: up to $1,000,000.
  • Skilling stream: $5,000 to $250,000 per project.
  • Exports stream: up to $250,000.
  • Security stream: up to $100,000.
• Co‑funding structure: All streams provide up to 50% of the eligible project expenditure, requiring applicants to fund the remaining costs from their own or partner resources.
• Streams and focus:
  • Sovereign Industrial Priorities – plant and equipment used directly to develop or deliver programs aligned with SDIPs.
  • Skilling – upskilling and training in priority trade, technical and professional skill sets for the defence workforce.
  • Exports – overcoming export barriers and building scale and competitiveness in defence capability priority areas.
  • Security – improving and maintaining security posture in line with the Defence Industry Security Program and SDIPs.
• Project timelines: Projects funded with NPS‑specific funding must be completed by 30 April 2026; other project durations are subject to the grant agreement and guidance in the stream guidelines. Batches are assessed regularly through to 2027–28, with closing dates for each batch updated on business.gov.au.

Eligibility Criteria

Key entity‑level requirements include:

• Applicant must have an Australian Business Number (ABN).
• Applicant must be a small to medium enterprise (fewer than 200 employees) or a Defence Industry Association (Skilling stream only).
• Applicant must be registered for GST.
• Applicant must be non‑income‑tax‑exempt.
• Applicant must hold an account with an Australian financial institution.
• Applicant must be an eligible legal entity, such as:
  • An entity incorporated in Australia
  • a company limited by guarantee
  • An incorporated trustee applying on behalf of a trust.

Applicants are ineligible if they, or a project partner, are on the National Redress Scheme list of institutions that have not joined or signalled intent to join the Scheme, are non‑compliant large employers under the Workplace Gender Equality Act 2012, income‑tax‑exempt, individuals, partnerships, overseas entities, unincorporated associations, trusts (except via an incorporated trustee), or government bodies and government business enterprises. Projects must also meet “eligible project” and “eligible expenditure” rules set out in the stream guidelines, including alignment with SDIPs and, where applicable, the NPS program.

Eligible Activities and Expenses

The program supports activities and expenditure that directly build defence industrial capability within the scope of each stream. Examples include:

• Acquisition and commissioning of new manufacturing plant and equipment used directly to develop or deliver SDIP‑aligned programs (Sovereign Industrial Priorities).
• Training and upskilling activities in priority trade, technical and professional skills for the defence workforce, including structured training programs and workforce development initiatives (Skilling).
• Export development activities that help overcome market entry barriers and build scale and competitiveness in defence exports (Exports).
• Implementation and maintenance of security measures and systems required for defence suppliers, consistent with the Defence Industry Security Program (Security).

The Defence guidance notes that expenditure relating to product development, prototyping, research and development, non‑recurring engineering, and items specifically listed in Appendix B of the guidelines is likely to be ineligible. Applicants must review Section 5.1 and Appendices A and B of the relevant stream guidelines to confirm which project activities and costs will be supported.

Assessment Process

The program uses an open, competitive selection process, with applications assessed in batches against published criteria for each stream. Applicants can apply at any time while the opportunity remains open, but assessment occurs at fixed batch dates published on business.gov.au.

To be competitive, applications must address all assessment criteria and sub‑criteria in the online form, attach all mandatory documents, and demonstrate a strong link to one or more Sovereign Defence Industrial Priorities. Additional assessment considerations include project merit, alignment with strategic Defence priorities (including the NPS program where relevant), value for money, and the applicant’s capacity to deliver the proposed project.

Recent Program Updates

On 28 February 2025, the Australian Government approved an additional $15.5 million for the program over 2024–25 and 2025–26 to support projects aligned with the Nuclear‑Powered Submarine program, increasing the total available funding to $169.1 million. This additional funding is allocated as approximately $13 million to Sovereign Industrial Priorities, $300,000 to Skilling, $1.7 million to Exports, and $500,000 to Security.

Guidelines and application forms for all streams have been updated to reflect NPS funding, clarify eligible and ineligible expenditure, and refine attachment requirements, including the removal of travel and overseas travel from the Security stream eligible budget. Projects seeking NPS funding must be completed by 30 April 2026 and must include a Letter of Support issued by the Australian Submarine Agency (ASA) with their application.

Application Tips

• Confirm eligibility: Check entity type, size, tax status, and location, and ensure both the project and expenditure categories are eligible under the relevant stream guidelines before investing in a full application.
• Align with priorities: Clearly articulate how the project supports one or more Sovereign Defence Industrial Priorities, and for NPS‑focused projects, how it contributes to the NPS program and associated industrial outcomes.
• Prepare documentation early: Download and review the grant opportunity guidelines, sample application forms, sample grant agreements and project budget templates for the relevant stream, and prepare required attachments such as budgets and accountant declarations in advance.
• Demonstrate capability and value: Provide evidence of organisational capability, governance, and financial viability, and show that the project represents value for money and can be delivered within the proposed timeframe and budget.
• Complete all criteria: Use the online portal to address every assessment criterion and sub‑criterion in detail, using the “How do I demonstrate this?” guidance in the form, and ensure all mandatory attachments are uploaded before submission.

Where to Get Help

Consider consulting with a professional grant specialist, such as Pattens Group. We offer initial assessments to review your business’s eligibility and evaluate how well your project aligns with the grant’s objectives. You can also visit relevant government websites for application templates and further guidance.