Türkiye's Defence Sector: Investment Climate, Legal Framework and Strategic Outlook

Key Points

This edition has been updated to reflect recent market developments and the latest available industry data to mark the NATO Summit held in Ankara on 7–8 July 2026, at which Türkiye’s defence sector capabilities were prominently showcased to an international audience. Paksoy will continue to publish further editions in this series as the legal and regulatory framework governing the sector evolves.

Sector Overview

Türkiye’s defence sector has undergone a notable transformation in recent years, both in terms of production capabilities and international engagement. The sector has evolved from a primarily procurement-driven model towards a more integrated industrial base focused on design, development, and advanced manufacturing. This shift is reflected in the increasing scale and complexity of ongoing defence programmes, including integrated air defence systems, as well as in significant capacity expansion initiatives undertaken by leading domestic manufacturers. In parallel, the sector’s external performance is strengthening, with rising export volumes, expanding industrial cooperation and long-term international partnerships. Today, the Turkish defence sector exports more than USD 10 billion^[1] worth of defence products to over 185 countries^[2].

The sector’s growth has been supported by Türkiye’s established industrial base, comprising more than 3,500 companies and 100,000 employees, an extensive supplier network and a skilled workforce capable of supporting high-volume manufacturing at scale. As a result, the sector today supports more than 1,400 defence projects with a combined portfolio exceeding USD 100 billion^[3] and generates approximately USD 20 billion in annual turnover. ^[4]

The growth in the overseas sales and export contract pipelines has further led to broader cross-border industrial cooperation, strategic collaborations, and mergers and acquisitions in foreign markets. One of the factors supporting this international expansion is the Turkish export licensing framework. The Ministry of National Defence of Türkiye (Milli Savunma Bakanlığı) generally processes export licence applications within comparatively short timeframes, while the Turkish export-control framework is generally subject to fewer procedural approval requirements. Furthermore, unlike the export-control regimes of certain jurisdictions, the Turkish regulatory framework does not generally restrict the subsequent international transfer of technologies developed in Türkiye. This affords foreign investors greater flexibility to develop technologies in Türkiye for international deployment and commercialisation, subject to applicable legal, contractual and project-specific requirements.

Another factor contributing to the sector’s development is the availability of public investment support, including investment incentives, tax and customs advantages, social security and financing support, incentives for R&D centres and technology development zones and, for strategically significant projects, individually negotiated investment packages.

These developments have positioned Türkiye as one of the region’s leading defence manufacturing and export hubs and a significant participant in international defence industrial cooperation. They have created a dynamic environment for cross-border investment, technology partnerships and strategic collaborations, making careful transaction structuring and regulatory engagement more relevant for international investors.

Leading Sector Participants

The Turkish defence sector is led by a number of established companies, several of which are affiliated with the Turkish Armed Forces Foundation, which has played a significant role in supporting the development of Türkiye’s domestic defence capabilities. Key industry participants include:

• • ASELSAN, Türkiye’s largest defence electronics company specialising in radar systems, electronic warfare technologies, communications and air defence systems
  • Turkish Aerospace Industries (TUSAŞ), the country’s leading aerospace manufacturer responsible for the development and manufacture of aircraft, helicopters, unmanned aerial systems (UASs), satellites and space technologies
  • ROKETSAN, a leading developer and manufacturer of missile systems, rocket technologies and precision-guided munitions
  • HAVELSAN, a defence software and systems company specialising in command-and-control systems, simulation technologies, cyber security and naval combat systems
  • Baykar, a defence technology company specialising in unmanned and autonomous systems, with an estimated 60%^[5] share of the global unmanned combat aerial vehicle (UCAV) export market

• BMC, a manufacturer of military trucks, logistics vehicles and armoured platforms with Turkish and Qatari shareholders

The sector is also characterised by long-standing industrial cooperation and joint venture arrangements. Notable examples include TUSAŞ Engine Industries (TEI), a joint venture between Turkish Aerospace Industries, GE Aerospace, the Turkish Armed Forces Foundation and the Turkish Aeronautical Association, as well as Alp Aviation, which has maintained a long-standing industrial partnership with Sikorsky.

Foreign Direct Investment

There is no foreign direct investment authority in Türkiye that clears foreign investment transactions. As a general principle, foreign entities may freely establish, acquire, and dispose of interests in business enterprises and the amount of foreign ownership in companies is unlimited, except for certain regulated sectors, such as aviation, where the majority of a company’s share capital must be held by Turkish shareholders.

Although there are no explicit restrictions on foreign direct investment in the defence sector, the presence of foreign direct investment may result in a reassessment of existing licences and permits and may influence the scope of activities that the defence company is authorised to carry out. For instance, where the target holds a production permit relating to military products, a change in the shareholding structure that results in a change of 51% or more in the shareholder composition may lead to the revocation of the relevant production permit. In this context, the involvement of foreign direct investors may trigger additional regulatory review processes and, in certain circumstances, operational restrictions. Accordingly, it is both customary and advisable to engage with the relevant authorities at an early stage and seek regulatory comfort prior to completing any such transaction.

Legal and Regulatory Landscape

The Turkish defence sector operates within a comprehensive regulatory framework shaped by national security considerations and sector-specific legislation. This framework governs the establishment, licensing, operation, and supervision of industrial enterprises engaged in the production, sale and export of military equipment, weapons, ammunition, and explosives. It also introduces authorisation requirements, ongoing notification obligations, and enforcement mechanisms in case of non-compliance, with detailed procedures prescribed in the relevant secondary legislation.

Separately, defence activities involving classified information, projects, systems, and technologies are subject to a dedicated security regime. This regime regulates, among others, facility and personnel security clearances, classification principles, access to sensitive information, and related supervision mechanisms.

The Presidency of Defence Industries (Savunma Sanayii Başkanlığı) plays a key role in determining defence policies, coordinating projects, managing procurement processes, and supporting the sector through various financing and incentive mechanisms. The Ministry of National Defence of Türkiye (Milli Savunma Bakanlığı) remains a core authority, particularly in relation to licensing and operational approvals.

Companies active in the sector are subject to ongoing supervision and are required to comply with various operational, technical and security-related requirements. Moreover, they are subject to notification and reporting obligations regarding key corporate matters, including shareholding structure, board composition, and authorised signatories. These obligations become particularly relevant in the context of foreign investment and corporate transactions. Changes in ownership or control may trigger regulatory scrutiny, especially where such changes could affect the company’s eligibility to participate in defence programmes or maintain existing licences and permits.

Recent Industry Developments

The following recent developments illustrate the scale and pace of activity in the sector:

• Türkiye and the United Kingdom recently signed an agreement valued at approximately USD 10.7 billion for the procurement of 20 Eurofighter Typhoon fighter jets. Following the procurement agreement, Türkiye and the United Kingdom have signed a training and support agreement to facilitate the implementation of the programme.
• Turkish defence companies signed contracts worth approximately USD 6.5 billion to develop the integrated Steel Dome air defence network. The programme continues to advance through increased industrial investment and production, with ASELSAN announcing plans to increase Steel Dome deliveries by approximately 50% in 2026.
• ASELSAN announced plans to invest approximately USD 1.5 billion in a new defence technology base expected to significantly increase production capacity and become one of the largest integrated air defence production sites in Europe.
• The Baykar–Leonardo joint venture established to develop and produce UASs for the European market was conditionally approved by the Italian government in June 2026 under Italy’s foreign investment review regime. Baykar separately completed its acquisition of the Italian aviation company Piaggio Aerospace in 2025.
• Türkiye and the United States are discussing a broader cooperation framework that may include defence cooperation and energy investments. The discussions are reported to extend to Türkiye’s re-engagement with the F-35 fighter jet programme and possible investments by US energy companies in regional energy projects. Discussions regarding broader defence cooperation also continued during the NATO Summit held in Ankara in early July 2026. However, no formal agreement has been announced to date.

Market Outlook

The Turkish defence industry is transitioning from an export-oriented manufacturing base into a platform for industrial cooperation, technology partnerships and cross-border investment. Large-scale procurement programmes and cooperation initiatives with international partners, substantial investments in next-generation defence technologies, and the continued expansion of export activities by Turkish defence companies all point towards a more internationally integrated and technologically advanced industry.

At the same time, cross-border collaborations, including joint venture arrangements in areas such as unmanned aerial vehicles (UAVs), demonstrate the  integration of the Turkish defence sector into global supply chains. Investment in unmanned and autonomous systems over the past two decades has positioned Türkiye as a leading developer in this field, supporting growing international demand for Turkish technology and technical expertise. Türkiye’s role as a defence manufacturing and industrial cooperation partner has been further reinforced by the heightened emphasis placed on defence industrial production, industrial cooperation and joint capability development during the 2026 NATO Summit in Ankara.

The Turkish defence sector continues to present opportunities for foreign investment, industrial cooperation and strategic partnerships. Those opportunities remain subject to a regulatory framework shaped by national security considerations, making early legal and regulatory assessment an important component of transaction planning.

[1] Presidency of Defence Industries (Savunma Sanayii Başkanlığı) (SSB), 2025 Annual Report, published in February 2026.

[2] Remarks by Prof Dr Haluk Görgün, President of SSB, at the 4^th International Conference on Global Strategies in Defence and Aerospace Industry, 31 January 2025.

[3] SSB, Defence Industry in Numbers (Sayılarla Türk Savunma Sanayii), available on the official SSB website.

[4] The figures in this paragraph are based on SSB, 2025 Annual Report, published in February 2026, unless otherwise indicated.

[5] Baykar, “Baykar, the Global Leader in UCAV Exports, Achieves $1.8 Billion in Exports in 2024”, Press Release, 1 February 2025.