Turkiye’s defense industry is undergoing a major shift, with accelerated domestic innovation, exports, and growing geopolitical relevance. Bezen & Partners Partner Aykut Bakirci, AECO Law Partner Emre Atayilmaz, Balcioglu Selcuk Eymirlioglu Ardiyok Keki Attorney Partnership Partner Kagan Dora, and Cakmak Partner Zeynep Cakmak discuss the sector’s transformation.
A Sector Transformed
“Turkiye’s defense industry has been undergoing a remarkable transformation, both in terms of capability and global visibility,” Cakmak explains. “What was once a domestically oriented sector has now become an increasingly competitive player in the international arena.”
Atayilmaz highlights a significant acceleration of domestic production capabilities in a broad range of military products. “Notably, the successful launch and landing of the Bayraktar TB3 drone from the domestically produced amphibious assault ship TCG Anadolu marked a global first and a milestone in naval drone operations,” he says. “Meanwhile, Turkiye has also unveiled the KAAN fighter jet project, a fifth-generation aircraft intended to replace aging F-16s in the Turkish Air Force. The defense sector is further diversified with advanced projects such as the Altay main battle tank, MILGEM-class warships, the Hurkus ground attack aircraft, and the AI-supported Steel Dome air defense systems. Additionally, the Turkish Navy has begun design work on a new aircraft carrier (Project MUGEM), which is expected to surpass the TCG Anadolu in size and capacity.”
As a result, “Turkiye has reduced its foreign dependency in defense from around 80% to 20%, with 82% of systems expected to be locally produced by the end of 2025,” Bakirci adds.
Defense Budget on the Rise
Alongside technological development, Turkiye’s commitment is reflected in its growing defense budget. “The defense budget stood at approximately TRY 228.5 billion in 2023 and rose to TRY 431.5 billion for 2024,” Bakirci states, adding that “for 2025, the allocated budget is TRY 612.9 billion. These figures show that defense spending has increased by nearly 2.7 times in just two years, but this has to be evaluated also in light of high inflation over the past few years.”
A broader look at long-term trends reinforces the scale of investment. “Turkiye’s defense expenditures rose by 110% between 2015 and 2024,” Cakmak reports. “In 2024 alone, the national defense and security budget surged by 12% compared to the previous year. While this growth already reflects a substantial rise in defense spending, the allocation of TRY 1.608 trillion (approximately USD 41.28 billion, based on May 2025 exchange rates) for 2025 indicates that this upward trajectory is set to continue at an accelerated pace.”
Still, in comparative terms, Turkiye’s spending remains below key international benchmarks. “Despite the defense-related expenditures growth, defense spending as a share of GDP remains modest by NATO standards, rising from 1.5% in 2023 to a projected 1.8% in 2025, still below NATO’s 2% benchmark,” Dora adds. “Approximately one-third of this spending is directed toward procurement and modernization, underlining Turkiye’s commitment to long-term capability development despite currency fluctuations and inflationary pressure.”
Behind the Build-Up
This dynamic industry is being driven by a mix of public and private sector actors. “Key state actors include ASELSAN (electronics and systems), TAI (aircraft and satellite technology), Roketsan (missiles and munitions), and STM (naval platforms),” Atayilmaz notes. “In the private sector, Baykar stands out as the manufacturer of the globally renowned Bayraktar drones while BMC contributes with armored vehicles such as the Kirpi and the Altay tanks. Also, Sarsilmaz and Canik are well-known firearms producers. Ongoing projects include Baykar’s development of the Kizilelma unmanned fighter jet, Roketsan’s Tayfun long-range missile, and the expansion of MILGEM frigates and submarines for both domestic and export use.”
“The SSB (Secretariat of Defense Industries) is the prime entity in Turkiye that is responsible for setting policies regarding the establishment of the infrastructure of the defense industry, with the authority and responsibility to apply these policies,” Cakmak adds.
These companies, according to Cakmak, produce a variety of products. “The technologies attracting the most investment span air, land, and naval platforms, with a strong emphasis on unmanned systems, missile technologies, and next-generation combat vehicles. In aerospace, for example, investment focuses on the development of both manned and unmanned aircraft, including national fighter jets and unmanned combat aircraft programs, whereas on land, resources are directed towards modern main battle tanks and integrated air defense systems.”
Export Markets
The expansion of capabilities has gone hand-in-hand with a shift in client focus. “While the primary customers of Turkish defense companies were initially local administrations, such as the Turkish Armed Forces, Turkish Gendarmerie, and Turkish National Police, the sector has undergone a remarkable transformation, with exports now playing a dominant role,” Cakmak notes. “Baykar, for instance, has become the world’s largest exporter of armed UAVs, driven by the success of the Bayraktar TB2, which is actively used by countries including Ukraine, Qatar, Romania, and Poland.”
The export strategy continues to gain momentum, with strong figures and global outreach. “While the Presidency of Defense Industries and Turkish Armed Forces remain cornerstone clients, export markets are expanding rapidly. Foreign orders surpassed USD 7.15 billion in 2024, with continued growth expected,” Dora states. “Turkiye’s adherence to NATO standards, combined with its competitive pricing and operational field experience, makes it an attractive supplier to both NATO and non-NATO countries.”
Legal Landscape: Navigating Change
As the industry grows in scale and complexity, regulatory discussions are gaining pace. “Although no sweeping legislative reform has been officially announced, there is a discussion around refining regulatory frameworks to accommodate the sector’s growth and foreign interest,” Atayilmaz says. “Enhanced export control mechanisms, stricter cybersecurity obligations for defense contractors, and updates to the Presidential Decree on Public Procurement (Decree No. 3373) may be anticipated in the long term. Moreover, as Turkiye deepens its defense ties with EU countries, alignment with EU dual-use and arms control regulations could gain attention. Practitioners should monitor potential changes concerning industrial participation requirements and domestic content thresholds in procurement contracts, especially related to IT infrastructure.”
“In the defense industry, export controls, licensing procedures, and the management of sanctions risks are at the forefront,” Bakirci notes. “However, due to the international reach of defense contracts, there is an increasing need for legal advice on contract structuring and regulatory compliance. In particular, international agreements concluded between the Republic of Turkiye and other countries in the field of defense, as well as proposed tax regulations targeting the defense industry, such as the draft legislation introducing a special tax on UAVs not intended for military use, should be monitored closely.”
“Turkiye recently introduced a new cybersecurity legislative framework, including the establishment of a national cybersecurity authority with jurisdiction over defense-related digital infrastructure,” Dora adds. “This is a notable step toward aligning national security with cyber resilience. Lawyers should also monitor prospective updates to procurement laws, defense offset regulations, and foreign direct investment screening, particularly as Turkiye works to align further with NATO and EU standards.”
The sector’s legal framework, however, still presents structural challenges. “Despite the sector’s rapid development, regulations concerning the defense industry in Turkiye remain scattered and may lack detail, as most issues are left to the broad discretion of the public administration,” Cakmak concludes. “The Defense Industry Agency’s 2024-2028 Strategic Plan acknowledges this fragmentation and identifies the preparation of a comprehensive defense industry law as a strategic priority. It highlights the need for new regulations in areas such as defense industry security, procurement, fund management, cybersecurity, AI, and intellectual and industrial property rights.”
This article was originally published in Issue 12.5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
