Türkiye’s defense and aerospace exports exceeded $10 billion in 2025, President Recep Tayyip Erdoğan said on October 17 at Türkiye Innovation Week 2026, marking a significant transition from import substitution to export-led industrial growth. For international investors, the milestone signals opportunities extending beyond weapons platforms into avionics, propulsion, software, advanced materials, maintenance and export logistics. It also highlights the unusual regulatory, security and geopolitical risks that distinguish defense investment from ordinary manufacturing.
A Record Year, With Important Accounting Distinctions
Erdoğan said Türkiye exported more than $10 billion in defense and aerospace products to 180 countries and regions during 2025. His statement broadly confirms figures previously released by the Presidency of Defence Industries, known by its Turkish abbreviation SSB.
According to SSB data, 2025 exports reached approximately $10.05 billion, compared with the narrower Turkish Exporters Assembly total of about $6.7 billion in 2024. The resulting annual increase was close to 48 percent. The reported 2025 total included roughly $9.87 billion in goods and $184 million in services.
Investors should nonetheless treat comparisons between Turkish defense-export statistics carefully. SSB figures can include NATO-related transactions and service exports that do not always appear in the same form in Turkish Exporters Assembly data. The broader SSB measure put 2024 exports at $7.15 billion, while the exporters’ assembly reported a lower goods-focused figure. Recent official references also vary between 180 and 185 export destinations, apparently reflecting differences in timing and classification.
These variations do not alter the direction of travel. SSB’s current industry profile says Türkiye’s defense and aerospace ecosystem comprises more than 4,000 companies, directly employs over 100,000 people and generates annual turnover above $25 billion. SSB’s historical series puts exports at only $248 million in 2002, implying a roughly fortyfold expansion by 2025.
The growth also outpaced Türkiye’s overall export performance. Turkish Exporters Assembly data showed total merchandise exports rising 4.5 percent to a record $273.4 billion in 2025. Defense and aerospace therefore remained a relatively modest share of national exports, but they became one of the country’s fastest-growing sources of high-value, technology-intensive foreign revenue.
From Drones to Full-Spectrum Defense Systems
Türkiye first gained broad international visibility through relatively affordable unmanned aircraft, particularly Baykar’s Bayraktar TB2. The export mix is now moving beyond drones toward missiles, radars, armored vehicles, naval vessels, training aircraft and potentially combat jets.
Baykar reported $2.2 billion in exports during 2025, with international sales accounting for 88 percent of its revenue. That performance demonstrates both the strength and the concentration risk within the sector. A small number of large platform manufacturers account for a substantial share of export value, while thousands of smaller suppliers depend on their procurement programs.
Other manufacturers are climbing international rankings. SSB reported that five Turkish groups appeared in the 2025 Defense News Top 100: ASELSAN, Turkish Aerospace Industries, Roketsan, ASFAT and MKE. Their positions reflect the widening range of Turkish capabilities, from electronic warfare and electro-optics to missiles, aircraft, shipbuilding and ammunition.
The Stockholm International Peace Research Institute offers a separate measure based on deliveries of major conventional weapons rather than customs revenue. SIPRI ranked Türkiye as the world’s 11th-largest arms exporter during 2021 to 2025, with a 1.8 percent global share. Its estimated volume of Turkish major-arms exports increased 122 percent compared with 2016 to 2020. The difference between SIPRI’s transfer-volume methodology and Turkish dollar-denominated export figures is important, but both show rapid market-share gains.
Recent contracts indicate that Türkiye is moving toward larger and more complex programs. In June 2025, Erdoğan announced an agreement to supply Indonesia with 48 KAAN combat aircraft. The Associated Press reported that financial details were not officially disclosed, although Turkish media estimated the potential value at around $10 billion. Indonesia’s industrial capabilities are expected to be incorporated into production, making the arrangement as much a technology and industrial partnership as a conventional sale.
The deal carries execution risk. KAAN completed its first flight in February 2024, but it remains in development, and initial Turkish deliveries have been projected for the late 2020s. Export revenue will therefore depend on testing, certification, engine availability, financing and a long production schedule.
Turkish Aerospace Industries also agreed on a €2.6 billion package covering 30 HÜRJET advanced training aircraft for Spain, according to SSB’s 2025 industry assessment. Naval exports included an agreement for two İSTİF-class frigates for Indonesia and logistics ships for Portugal. Such programs generate opportunities for suppliers over several years through integration, simulation, maintenance, training and spare-parts support.
Export Orders Are Becoming Industrial Partnerships
The clearest FDI opportunity lies in the conversion of arms sales into cross-border production networks. Buyers increasingly seek local assembly, technology transfer and participation by domestic suppliers. Turkish companies, in turn, need access to foreign certification, distribution channels and specialized technologies.
Baykar and Italy’s Leonardo illustrated this model in 2025. The companies announced an Italy-based joint venture covering the design, production and maintenance of unmanned aerial systems. Leonardo said the partnership would combine Baykar’s aircraft platforms with its own mission systems, payloads and European certification experience. Baykar had also acquired Italian aircraft manufacturer Piaggio Aerospace, giving it an industrial presence inside the European Union.
These arrangements challenge the idea that Turkish defense growth is based solely on domestic production. The country’s policy emphasizes local control of critical technologies, but its major platforms still operate within international supply chains. Aircraft engines, specialty alloys, semiconductors, sensors, machine tools and certification services can involve foreign inputs.
An International Institute for Strategic Studies study described this tension as a defining feature of Türkiye’s defense model. The country’s drive for autonomy grew partly from earlier arms embargoes, especially those imposed after the 1974 Cyprus intervention. Yet IISS concluded that complete self-sufficiency becomes increasingly costly as weapons systems grow more sophisticated. Cooperation remains necessary, even as Ankara seeks to reduce the risk that a foreign supplier can interrupt a strategic program.
For investors, this creates a preference for partnerships that add technology and production capability inside Türkiye, rather than operations centered only on imported equipment. Joint ventures, licensing, local research centers and component manufacturing are more closely aligned with procurement policy. They can also improve eligibility for Turkish programs and open access to the supplier networks surrounding ASELSAN, Turkish Aerospace, Roketsan, Baykar and state-controlled manufacturers.
Incentives Improve the Economics, but Location Matters
Defense and aerospace investments can qualify for Türkiye’s broader manufacturing, research and technology incentives. The Investment and Finance Office reports that 432 incentive certificates were issued to international investors in 2025, covering TRY109.5 billion in planned investment and approximately 16,700 jobs across sectors.
Under the current incentive framework, high-technology projects meeting applicable thresholds can receive priority treatment. Available instruments may include customs-duty and value-added-tax exemptions for machinery, corporate-tax reductions, employer social-security support, interest or profit-share assistance and land allocation. The precise package depends on location, technology classification, investment size and policy priority.
Technology Development Zones are particularly relevant to defense software, simulation, artificial intelligence and command-and-control systems. Türkiye had 101 approved zones in 2026, including 87 in operation. The Investment and Finance Office says qualifying software, research and design income in these zones can benefit from tax exemptions through December 31, 2028, while eligible personnel costs and certain software sales receive additional relief.
Manufacturing location creates a different set of considerations. Ankara offers proximity to SSB, Turkish Aerospace, ASELSAN and the specialized aerospace and defense industrial cluster. Istanbul and Kocaeli provide deeper logistics and engineering networks, while İzmir, Bursa and Eskişehir offer strong capabilities in machining, automotive systems and aviation. Free zones can be attractive for export-oriented production, but security licensing and controlled-material requirements may outweigh ordinary customs considerations.
Selecting a site therefore requires more than comparing wage, land and utility costs. Market-entry analysis must assess proximity to prime contractors, clearance eligibility, export routes, skilled labor, disaster resilience and the conditions attached to investment incentives. Project management is equally important because construction, equipment imports, certification and security approvals must proceed in the correct sequence.
Regulation, Security and Export Controls Shape Market Access
Türkiye’s Foreign Direct Investment Law generally gives foreign investors equal treatment and permits them to establish or acquire Turkish companies. Defense activity, however, is governed by additional controls that can materially affect ownership structures and operational access.
Companies producing military equipment, weapons, ammunition or explosives covered by Ministry of National Defence lists require a facility-establishment permit. Production, sales and exports are regulated under Law No. 5201, while Law No. 5202 governs defense-industry security. Facilities handling classified projects may also require facility-security certificates, and relevant employees can be subject to personnel-security investigations.
Foreign ownership does not automatically exclude a company from the sector, but it can limit access to classified work. Türkiye’s Defense Industry Security Regulation provides that a company with foreign shareholders or foreign board members may receive only the specified national “restricted” level of facility-security certification following inspection. Ownership and governance decisions can therefore determine which tenders and information a venture can access.
Exports add another layer. The Ministry of National Defence requires separate authorization for controlled military items, generally supported by end-user documentation. Applications must identify whether equipment falls within Türkiye’s controlled list, the Wassenaar Arrangement munitions list or the Missile Technology Control Regime annex. Separate applications may be needed when the same product is shipped to different countries. Even temporary exports for demonstrations, repairs or trade fairs require the appropriate procedure.
This makes legal and tax compliance inseparable from commercial strategy. A foreign supplier must map Turkish controls alongside those of its home country, including re-export restrictions on incorporated components. Sanctions screening, beneficial-ownership checks, anti-bribery controls and end-use monitoring should be embedded before contracts are signed.
Government relations also has an operational function in this industry. Investors may need coordinated engagement with SSB, the Ministry of National Defence, the Ministry of Industry and Technology, customs authorities and provincial administrations. Expo representation at events such as IDEF can generate access to delegations and procurement partners, but samples and controlled technical data cannot be moved or presented as if they were ordinary commercial goods. The 2025 IDEF fair hosted more than 900 Turkish companies, 400 foreign firms and 44 national pavilions, demonstrating both the market’s scale and the importance of formal institutional channels.
What This Means for Foreign Investors
Türkiye’s $10 billion export milestone shows that its defense industry is no longer only a protected domestic market. It is becoming an export platform linking NATO customers, Gulf states, Asia and emerging markets. The strongest investment prospects are likely to sit below the headline platforms, including electronics, propulsion subsystems, secure communications, advanced manufacturing, maintenance, simulation, testing and dual-use software.
Entry nevertheless requires a staged approach. Investors first need market-entry work identifying accessible programs, local-content expectations and credible Turkish partners. Incorporation and corporate structuring must account for governance, intellectual-property ownership, security-clearance consequences and possible competition approvals. Investment-incentive analysis should be completed before capital expenditure, because eligibility often depends on obtaining certificates and structuring the project correctly at the outset.
Legal and tax compliance must then be integrated with facility permits, employment arrangements, customs classifications and export controls. Government relations and regulatory liaison are necessary to coordinate approvals without treating political access as a substitute for formal compliance. Expo representation can support business development, while import-export facilitation is needed for prototypes, controlled components and temporary exhibition shipments. Finally, on-the-ground project management is essential to keep construction, licensing, supplier qualification and incentive milestones aligned.
The export record provides evidence of demand, but not a guarantee of easy entry. Investors able to combine technology with local production, long-term support and rigorous control systems will be better positioned than those pursuing simple product sales. Türkiye’s next stage of defense growth will depend on whether it can convert a surge in orders into reliable delivery capacity, deeper international partnerships and a broader base of investable suppliers.