Italian capital is becoming a more strategic test case for Türkiye’s next phase of foreign direct investment, as Ankara courts manufacturers, infrastructure groups, defense suppliers and financial institutions that can link Turkish production capacity with European markets. The signal came from Bekir Polat, deputy head of Türkiye’s Presidency Investment and Finance Office, who told Anadolu Agency in Rome that Italian companies’ interest in Türkiye is expected to keep rising, against a backdrop of more than 1,600 Italian firms already operating in the country and investment exceeding $5 billion.
A Bilateral Relationship Moving Beyond Trade
Polat’s remarks, carried by Anadolu Agency and republished by CNBC-e on November 26, 2025, were not a standalone promotional message. They followed the fourth Italy-Türkiye Intergovernmental Summit in Rome in April 2025, where President Recep Tayyip Erdoğan and Italian Prime Minister Giorgia Meloni set a new bilateral trade target of $40 billion.
The Turkish Investment and Finance Office said the summit produced 11 agreements and economic initiatives, while a Türkiye-Italy Business Forum brought together more than 500 companies from both countries. Its sector panels focused on infrastructure, sustainable energy, advanced manufacturing, aerospace and defense, which indicates that the bilateral agenda is shifting from conventional import-export flows toward structured industrial partnerships.
The baseline is already substantial. Türkiye’s Ministry of Foreign Affairs reports that bilateral trade reached $29 billion in 2025, with Turkish exports to Italy at $13.27 billion and imports from Italy at $15.73 billion. The ministry lists passenger vehicles, goods vehicles, machinery and fruits among Türkiye’s key exports to Italy, while imports from Italy include motor vehicle parts, petroleum oils, yachts and other vessels. Polat’s reference to a $32 billion “balanced” trade volume appears to reflect a broader or earlier trade measurement, but the direction is clear: Rome and Ankara both see room to deepen commercial ties.
Why Italy Matters for Türkiye’s FDI Strategy
Italy is not merely another European investor. It is a manufacturing economy with deep supply-chain positions in machinery, automotive components, pharmaceuticals, energy systems, infrastructure engineering, fashion and food processing. For Türkiye, those strengths overlap with sectors where Ankara wants higher value-added FDI.
According to Türkiye’s Investment and Finance Office, the country attracted $13.1 billion in FDI in 2025, a 12.2 percent year-on-year increase based on Central Bank balance-of-payments data. The office said manufacturing accounted for 31 percent of total inflows, while wholesale and retail trade accounted for 32 percent and information and communication for 14 percent. Treasury and Finance Minister Mehmet Şimşek said FDI excluding real estate reached $10.7 billion in 2025, the highest level in a decade.
That composition matters for Italian investors. If Türkiye is trying to move FDI away from real estate and toward production capacity, export platforms and technology-intensive sectors, Italian companies fit the targeted profile. The official FDI strategy aims to lift Türkiye’s share of global FDI to 1.5 percent and its share of investment into Central and Eastern Europe, the Middle East and North Africa to 12 percent by 2028. Italian participation can help that objective if projects move from distribution and contracting into local manufacturing, R&D, logistics and regional management functions.
Defense, Aerospace and Strategic Industry Lead the Repricing
The most visible symbol of the new relationship is defense and aerospace. At the April 2025 summit, Erdoğan highlighted the memorandum of understanding between Türkiye’s Baykar and Italy’s Leonardo to establish joint production in unmanned aerial vehicles. The Investment and Finance Office also noted Baykar’s acquisition of Italy’s Piaggio Aerospace as a strategic move reinforcing Türkiye’s European aerospace footprint.
The relationship advanced further in 2026. Reuters, in reporting republished by MarketScreener and Global Banking & Finance Review, said Italy conditionally approved the 50-50 Leonardo-Baykar drone venture in June 2026 under its “golden power” rules. The conditions limited international sales and further development to countries aligned with Europe and NATO, while classifying the relevant technology. Leonardo and Baykar have cited a potential drone market worth about $100 billion over the next decade.
For investors, the defense case carries a wider lesson. Türkiye can offer cost-competitive production, engineering talent and operationally tested technologies, but strategic sectors require careful navigation of export controls, classified technology rules, procurement restrictions, local-content expectations and government approvals. This is where market entry, government relations, legal and tax compliance, incorporation and project management become inseparable from the commercial thesis.
Incentives, Finance and the Role of Italian Institutions
The investment push is also financial. SACE, Italy’s export credit agency, announced almost €1 billion in new agreements at the April 2025 Italy-Türkiye Business Forum. It said the agreements were designed to support Italian exports across infrastructure, energy, consumer goods and fashion. SACE also said that since opening its Istanbul office in 2010, it had committed more than €8.5 billion in Türkiye, supporting projects worth over €25 billion.
The same summit included a memorandum between Türkiye’s Investment and Finance Office and SIMEST, the Cassa Depositi e Prestiti group institution that supports Italian companies abroad. This matters because many mid-sized Italian companies considering Türkiye are not only evaluating market access, but also financing structures, guarantees, supplier-credit models and public-backed internationalization tools.
On the Turkish side, the incentive architecture has become more segmented. The Investment Office’s current incentives guide identifies technology incentives, local development incentives, strategic incentives, sectoral and regional incentives, R&D and design center incentives, free-zone incentives and project-based packages under the HIT-30 program. It describes HIT-30 as a negotiation-based framework for large-scale, high-impact strategic projects.
For an Italian manufacturer, that means the investment decision is no longer simply whether to set up in Istanbul, Bursa, Izmir or another industrial region. It requires mapping eligible products, fixed-investment thresholds, regional support intensity, customs-duty exemptions, VAT exemptions on machinery, corporate-tax reductions, land allocation, R&D center status and free-zone treatment. Incentives advisory, site selection, incorporation and public-institution liaison are therefore core parts of execution, not afterthoughts.
Customs Union, CBAM and the EU Dimension
Türkiye’s appeal to Italian firms is strengthened by its customs relationship with the European Union. The European Commission says EU-Türkiye goods trade reached a record €217.6 billion in 2025 and that Türkiye remained the EU’s fifth-largest goods trading partner, representing 4.2 percent of the EU’s global goods trade. The Commission also notes that 42.7 percent of Türkiye’s exports went to the EU in 2025, while 35.3 percent of its imports came from the EU.
This makes Türkiye a potential nearshoring and regional production base for Italian companies serving Europe, the Middle East, North Africa and Central Asia. But it also subjects Turkish production to European regulatory pressure. The EU’s Carbon Border Adjustment Mechanism entered its definitive regime on January 1, 2026, requiring importers to handle authorization, reporting and certificate obligations for covered goods. For Turkish suppliers in steel, aluminum, cement, fertilizers, electricity and related value chains, CBAM is already changing contract terms and cost models.
Türkiye moved in response. The International Carbon Action Partnership reported that Türkiye adopted its first Climate Law on July 2, 2025, with publication in the Official Gazette on July 9. The law creates the basis for a national emissions trading system and climate governance framework. For Italian industrial investors, this creates both risk and opportunity. Plants designed around low-carbon production, verifiable emissions data and EU-aligned compliance systems may enjoy a stronger export position. Older or carbon-intensive assets could face cost pass-through disputes with European customers.
Macro Conditions Still Require Discipline
The positive FDI story does not eliminate Türkiye’s macro risks. The OECD’s June 2026 Economic Outlook projected Türkiye’s growth at 3.1 percent in 2026 and 3.8 percent in 2027, while warning that high commodity prices could pressure the current account and trigger currency depreciation if disinflation stalls. The World Bank has similarly described Türkiye’s growth as moderate under tight monetary policy, with inflation expected to decline gradually rather than disappear quickly.
For Italian companies, this means Türkiye’s opportunity must be evaluated through financial structuring as much as market demand. Currency exposure, local borrowing costs, inflation-indexed leases, wage agreements, customs valuation, transfer pricing and working-capital needs can materially affect returns. Legal and tax compliance is particularly important for groups using Türkiye as a regional hub, because cross-border contracting, management-fee arrangements, intra-group services and customs documentation are all areas of scrutiny.
The Strong Investment Hub Program announced in April 2026 adds another layer. EY reported that the program includes proposed tax and administrative measures covering transit trade, regional management centers, exporter corporate-tax reductions, service-export incentives and special rules for individuals relocating to Türkiye. EY also cautioned that the measures were at announcement stage and dependent on primary and secondary legislation. Investors therefore need to monitor implementation before building final tax models around these incentives.
What This Means for Foreign Investors
The Italian investment story shows that Türkiye is increasingly positioning itself as a platform for European-linked manufacturing, infrastructure, energy, logistics and strategic industry. But acting on that opportunity requires more than identifying demand. Investors need a market entry strategy that tests sector fit, customer access, competition, supply-chain depth and export routes before capital is committed.
They also need incorporation and corporate structuring that matches the operating model, whether the project is a sales subsidiary, manufacturing plant, joint venture, regional management center or free-zone exporter. Incentives work is central, because Türkiye’s support mechanisms vary by sector, region, technology level and project size. Legal and tax compliance must cover customs, employment, transfer pricing, environmental rules, CBAM-related data obligations and sector permits.
For Italian and other foreign firms entering Türkiye, government relations and regulatory liaison are especially important in defense, infrastructure, energy, logistics and strategic manufacturing. Expo and trade-fair representation can help test counterparties before incorporation, while import-export facilitation is critical for machinery, components and finished goods moving through EU-Türkiye channels. Once a project is approved, disciplined project management determines whether site selection, permits, supplier onboarding, recruitment, construction and incentive milestones stay aligned.
The lesson is not that Italian capital will automatically surge into Türkiye. It is that the policy, trade and industrial conditions now make a stronger case for serious feasibility work. For investors prepared to navigate regulation, incentives, financing and execution in detail, Türkiye’s relationship with Italy offers a practical template for how European companies can use the country as both a domestic growth market and a regional operating base.