On 4 March 2026, the European Commission published its proposed Industrial Accelerator Act (IAA), a draft regulation intended to strengthen industrial capacity in strategic sectors, accelerate decarbonisation, and reduce critical dependencies across the EU. The proposal also includes demand-side measures and permitting reforms intended to support industrial deployment in the EU. The proposal is likely to be relevant to a broad range of businesses operating in the EU and reflects the EU’s continued focus on strengthening industrial capacity, resilience and decarbonization through demand-side measures, investment conditions and permitting reform. It remains a proposal and would need to be adopted before taking effect.
The proposal should also be viewed against the backdrop of existing EU review tools. The draft refers to Member States designating an investment authority with due regard to authorities already responsible for implementing the EU Foreign Direct Investment Screening Regulation (Regulation (EU) 2019/452) and makes clear that assessments under the new framework would be without prejudice to EU competition law instruments, including the Foreign Subsidies Regulation and the EU Merger Regulation.
Foreign Investment Contribution
A central element of the proposal is a new approval framework for certain large foreign direct investments in emerging strategic manufacturing sectors. The proposed regime would apply to foreign direct investments exceeding EUR 100 million in batteries, electric vehicles, solar PV technologies, and the extraction, processing and recycling of critical raw materials, where more than 40% of global manufacturing capacity in the relevant sector is held by the third country of which the foreign investor is a national or undertaking. Covered investments could not be implemented without approval by the investment authority.
The proposal is targeted rather than economy-wide. It excludes, among other things, certain investors and investments covered by relevant economic partnership or free trade agreements, investments targeted at services, and portfolio investments.
The proposal also sits within the existing EU review landscape. The draft provides for coordination with authorities already responsible for implementing the EU Foreign Direct Investment Screening Regulation (Regulation (EU) 2019/452). It also states that the new framework would apply without prejudice to EU competition law instruments, including the Foreign Subsidies Regulation and the EU Merger Regulation.
Approval would be tied to a new industrial contribution test. Under the draft, in-scope investments would need to satisfy at least four of six conditions, and the workforce condition would in any event need to be met. Those conditions include a 49% cap on foreign ownership or control, a joint venture structure with EU participation, licensing of relevant intellectual property and know-how, EU-based R&D commitments, workforce commitments, and a strategy to enhance Union value chains, including efforts to source inputs from the Union.
One qualifying condition is that the foreign investor does not acquire or hold more than 49% of the share capital, voting rights or equivalent control rights in a Union target or Union asset. A separate condition contemplates a joint venture structure in which the foreign investor likewise holds no more than 49% of the relevant participating Union entities, together with arrangements intended to ensure effective participation of EU partners in management, technology transfer and capacity building.
The other conditions include licensing commitments in favour of the Union target or asset, annual R&D spending in the Union equivalent to at least 1% of gross annual revenue, a workforce composition in which at least 50% of workers are Union workers across all categories, and a published strategy aimed at strengthening Union value chains and prioritising sourcing from the Union. The proposal also contemplates review by designated national investment authorities, the possibility of conditions or commitments being attached to an approval, and administrative sanctions in certain cases of non-compliance.
Demand-Side Measures
The IAA also introduces low-carbon and Union-origin requirements for selected products in public procurement and public support schemes, including certain products in public procurement and public support schemes. Steel would be subject to low-carbon requirements, concrete and mortar and aluminum to both low-carbon and Union-origin requirements, and vehicles to Union-origin requirements. The proposal also provides for certain exceptions and would empower the Commission to extend or amend these requirements for additional products, including in the chemical sector. The proposal also empowers the Commission to adopt additional demand-side measures for products from the chemical industry and to amend existing Union-origin and low-carbon requirements for listed products.
These measures are intended to support demand for low-carbon and Union-produced industrial products and to reinforce resilience across key value chains.
Permitting Reform
The proposal also seeks to accelerate industrial deployment through permitting reform. It would require Member States to provide fully digital permitting procedures for industrial manufacturing projects, including a single user interface for applicants and paperless submission, tracking and decision-making. The broader framework also contemplates one-stop-shop mechanisms and more coordinated permitting processes. In addition, the proposal provides for a single access point for permit applications at national level and contemplates the designation of industrial manufacturing acceleration areas intended to facilitate industrial deployment in strategic sectors within 12 months after entry into force, as well as a 45-day completeness check for permitting applications.
Outlook
The proposal will now proceed through the EU legislative process and would need to be adopted by both the European Parliament and the Council before entering into force. If adopted in broadly its current form, it would add a new structuring consideration for investments in certain strategic sectors in the EU, with particular relevance for ownership, governance, technology arrangements, workforce commitments and supply-chain planning. It would also be relevant more broadly for businesses participating in public procurement, public support schemes and strategic manufacturing projects in the EU, against a broader backdrop of ongoing developments at the Member State level, as reflected for example in the recent changes to the Dutch foreign investment screening, merger control and national security review framework discussed in our recent Netherlands alert.