Türkiye’s defense and aerospace industry has moved from milestone to momentum, with July exports rising 14.4% year on year to $1.12 billion and seven-month shipments reaching $5.79 billion, according to Anadolu Ajansı’s August 3 report citing Defense Industries Secretariat head Haluk Görgün. For foreign investors, the significance is not only the headline growth rate. It is that Türkiye is turning a politically sensitive, state-guided sector into a durable export platform spanning drones, armored vehicles, naval systems, missiles, electronics, logistics and aerospace production.
A July Export Surge Confirms a Structural Shift
According to Anadolu Ajansı, Görgün said Türkiye’s defense and aerospace exports climbed 26.2% year on year in January-July 2026, while exports over the latest 12-month period reached $11.2 billion. He also said the sector recorded $10.5 billion in exports in 2025, roughly 48% above the previous year.
Those numbers place defense and aerospace in a different category from Türkiye’s broader export story. Trade Minister Ömer Bolat said, in a separate Anadolu report, that Türkiye’s total exports rose 2.9% year on year to $25.6 billion in July, while annualized exports reached $278.6 billion. Defense and aerospace is therefore growing far faster than the national export base, and its monthly July figure alone represented more than 4% of total goods exports for the month.
The Investment Office of the Presidency of the Republic of Türkiye says the sector’s exports rose from $1.6 billion in 2013 to $7.2 billion in 2024, while turnover reached $15.1 billion in 2023. It also reports more than 3,500 companies operating in the industry and a defense project portfolio exceeding 1,100 projects with a value above $100 billion in 2024.
For investors, this matters because the opportunity is no longer limited to prime contractors. Export growth is creating demand for components, testing, software, electronics, simulation, MRO, composite materials, propulsion sub-systems, cyber capabilities and specialized industrial services.
Drones Opened the Market, But the Export Base Is Broadening
The best-known symbol of Türkiye’s defense export rise remains Baykar. The company said in January 2026 that it generated $2.5 billion in revenue in 2025, with exports accounting for 88% of income and $2.2 billion in overseas sales. Anadolu reported in 2025 that Baykar had export agreements with 36 countries for its UAVs, including 35 countries for Bayraktar TB2 and 15 for Akıncı.
But the July export data suggests a broader industrial base. Görgün has said Türkiye exports more than 230 defense products to 185 countries, a figure also reported by Anadolu during the SAHA 2026 defense and aerospace exhibition in Istanbul. Those products include UAVs, armored platforms, naval systems, weapons, ammunition, missiles, radars and electronic warfare technologies.
This diversification reduces concentration risk. A foreign investor assessing Türkiye’s defense ecosystem should not read the market as a single-company drone story. The more relevant trend is the formation of a tiered supplier network around firms such as Baykar, Turkish Aerospace Industries, ASELSAN, Roketsan, STM, MKE and HAVELSAN.
That has direct FDI implications. Market entry analysis must identify where foreign technology is complementary rather than politically substitutive. Incorporation and corporate structuring must account for whether an investor is supplying civilian aerospace, dual-use technologies or controlled defense products. Legal and tax compliance becomes central once components, software, encryption, sensors or technical data fall under export control rules.
Global Demand Is Moving Toward Cost, Speed and Local Partnership
Türkiye’s export momentum is aligned with changes in global defense procurement. The Stockholm International Peace Research Institute reported in March 2026 that global transfers of major arms in 2021-2025 were 9.2% higher than in 2016-2020, while European arms imports more than trebled. SIPRI said the United States remained the largest global supplier, but Türkiye’s rise reflects demand from countries seeking alternatives to high-cost Western systems and politically constrained Russian supply.
Recent Turkish deals show how Ankara is positioning itself. The Associated Press reported in June 2025 that Türkiye agreed to export 48 KAAN fighter jets to Indonesia, the first export deal for its domestically developed fifth-generation fighter program. AP said local media valued the arrangement at about $10 billion, while noting that President Recep Tayyip Erdoğan did not disclose official financial terms. Turkish Aerospace later described the Indonesia agreement as the largest defense agreement in the history of the Republic and said it involved planned delivery of 48 KAAN platforms.
Such transactions are rarely pure exports. They often involve training, maintenance, localization, production engineering, technology transfer, financing and long implementation periods. That is where foreign investors may find a role, especially if they bring niche technologies that Turkish primes can integrate into export packages.
Expo representation also becomes practical, not cosmetic. SAHA 2026, according to Anadolu, was expected to generate around $8 billion in contracts, with officials presenting it as a platform for export deals and industrial cooperation. For foreign companies without an established Ankara or Istanbul presence, defense fairs are increasingly where counterparties, ministries, procurement agencies and potential local partners converge.
Incentives Are Available, But They Are Not Automatic
Türkiye’s industrial policy has become more explicit in linking high-technology investment to incentives. The official HIT-30 program website describes the scheme as a high-priority technology investment program offering comprehensive support and tailored solutions. Anadolu reported in July 2026 that Industry and Technology Minister Mehmet Fatih Kacır said the HIT-30 program aims to support key investment areas with $30 billion in state support by 2030 and that calls for innovative defense technologies are expected to attract international investment.
The Investment Office’s incentives guide lists project-based incentives under HIT-30, R&D and design center incentives, and free zone incentives for export-oriented manufacturing. For a defense or aerospace investor, this means the incentive question is not simply whether Türkiye offers tax relief. It is whether the proposed investment qualifies under the correct route, whether the project is considered strategic or high-impact, and whether the company can satisfy localization, reporting, employment, importation and performance obligations after approval.
This is where investment incentives work intersects with project management. A foreign investor setting up a sensor facility, avionics software unit or precision-machining operation may need to coordinate land allocation, customs exemptions, VAT relief, R&D center recognition, equipment importation and supplier approvals. Missing one step can delay production or weaken the commercial case.
Regulation Remains the Main Execution Risk
The FDI framework is broadly open. White & Case’s 2026 review of Türkiye’s FDI regime notes that Article 3 of the Foreign Direct Investment Law provides freedom to invest and equal treatment for foreign investors. ICLG similarly describes Türkiye’s FDI regime as notification-based rather than a broad national security screening system.
Defense is different in practice. Legal analysis published by Paksoy in July 2026 notes that foreign investment is not explicitly restricted in the defense sector, but changes in ownership or control can trigger reassessment of licenses and operational authorizations. Türkiye’s export-control framework also involves Law No. 5201, under which the Ministry of National Defense licenses and supervises production and export of war materials, weapons, ammunition and related items.
For international companies, this creates a dual challenge. The corporate law entry route may be straightforward, but the operating route is not. Import-export facilitation must account for Turkish controls, destination-country licensing, sanctions exposure, NATO-origin components, end-use restrictions and re-export clauses. Legal and tax compliance must also cover procurement rules, anti-bribery controls, data security, personnel clearances where applicable, and transfer-pricing arrangements for cross-border group structures.
Government relations is unavoidable because defense projects sit close to public procurement and strategic policy. Investors need structured engagement with SSB, the Ministry of National Defense, the Ministry of Industry and Technology, customs authorities and, in some cases, foreign export-control agencies.
Macro Conditions Add Opportunity and Friction
Defense exports also interact with Türkiye’s wider economic picture. The Central Bank of the Republic of Türkiye publishes Turkish Statistical Institute data showing annual CPI inflation at 31.75% in July 2026. That remains high for industrial investors managing wages, imported inputs and long-term contracts. Currency volatility can support export competitiveness, but it can also complicate cost forecasts and financing.
At the same time, FDI data point to renewed investor interest. The Investment Office reported that Türkiye attracted $6.3 billion in FDI in the first half of 2025, up 27.1% from the same period of 2024, based on Central Bank data. Daily Sabah, citing official data, reported that 2025 FDI inflows reached $13.1 billion, up 12.2% year on year.
Defense and aerospace can benefit from this environment because they offer hard-currency revenues, state-backed demand signals and a growing supplier ecosystem. But investors still need disciplined entry planning. The commercial upside is strongest where foreign firms can localize production without losing control of core intellectual property, build Turkish export capability without breaching third-country controls, and align with Turkish industrial priorities without assuming every announced incentive will be granted.
What This Means for Foreign Investors
The July export surge confirms that Türkiye’s defense and aerospace sector has crossed from episodic growth into a sustained export cycle. The opportunity for foreign investors is real, but it is operationally complex.
Acting on it requires market entry work to identify the right product segment and local counterparties, incorporation and corporate structuring to manage ownership, IP and contracting risk, investment incentives support to secure and comply with available programs, legal and tax compliance to address licensing and export controls, government relations to navigate approvals, expo representation to access procurement and partnership channels, import-export facilitation for controlled goods and technologies, and project management to turn an approved investment into an operating facility.
The investors best positioned to benefit will be those treating Türkiye not only as a sales market, but as a regulated manufacturing, engineering and export base tied to NATO demand, emerging-market modernization and Ankara’s long-term industrial strategy.