What is the Defense Industry Sector?

The defense industry sector, also known as the arms industry, is responsible for all processes from the production to the sale of weapons and military technology. The defense industry (arms industry) consists of a commercial industry involved in the research and development, engineering, production, and service of equipment, military material, and facilities.

The Situation of the Defense Industry Sector in Turkey and the World

The Turkish defense industry continues its efforts to produce high-tech products that can operate in land, sea, and air environments. While most of the projects are carried out with state support, the private sector has also started to take part in this field, continuing its work to this day alongside large firms involved in the Defense Industry.

The status of the Turkish arms industry is increasing every day. The sector's budget, which has nearly increased 12-fold since the early 2000s, reached $60 billion at the end of 2020, up from $5.5 billion at the beginning of 2002. According to a study conducted by the Stockholm International Peace Research Institute (SIPRI), Turkey is ranked as the world's 14th largest exporter of defense weapons.

While the global defense industry sector continues to develop rapidly, the USA maintains its leadership in the sector. The ranking of firms listed in the "Defence News Top 100 List" is as follows;

Looking at the ranking in the list, it is seen that after the USA, China is the second leading company in the sector.

Leading Companies in the Defense Industry Sector

1. What Are the General Supports for the Defense Industry Sector?

There are various supports provided for the defense industry sector by KOSGEB, TÜBİTAK, and the Ministry of Trade. The supports provided for the defense industry sector are divided into project-based and general supports. Below are the details of the supports provided for the defense industry sector.

TÜBİTAK Project-Based Supports

A) TÜBİTAK 1501 - Industrial R&D Project Support Program Under the 1501 - Industrial R&D Support Program, R&D qualified projects conducted in the context of the definition of innovation; products produced, improvements to existing products, enhancing product quality or standard, or developing new techniques or production technologies of a cost-reducing nature are supported. The support rate of the program is applied at 75%.

*There is no budget limit.
*Feasibility is requested for investments over 5 million.
A) TÜBİTAK - 1507 - SME R&D Start-Up Support Program Call
The supports provided under the 1501 Industrial R&D Support Program aim to support project-based research - technology development activities and innovative activities of Small and Medium-Sized Enterprises (SMEs).

*Valid for projects up to 1,200,000 TL.

KOSGEB Project-Based Supports

A) KOSGEB Technology Investment Program
https://odsdanismanlik.com/tr/kosgeb-kobi-teknoyatirim-destek-programi/
B) KOSGEB International Market Program
https://odsdanismanlik.com/tr/kosgeb-yurt-disi-pazar-destek-programi/
C) KOSGEB R&D Product Development Program
https://odsdanismanlik.com/tr/kosgeb-arge-urge-ve-inovasyon-destek-programi/

KOSGEB General Supports

For detailed information; https://odsdanismanlik.com/tr/hibe-ve-destek-yonetimi-danismanligi/

Ministry of Trade Project-Based Supports

A) Global Supply Chain Project
Support Amount: 15,000,000 TL
Support Rate: 50%
Support Duration: 2 Years

Industry Sectors where the Global Supply Chain Support Project can be implemented;
• Mining and Metal
• Chemical products
• Automotive
• Machinery
• Space / Aviation
• Electrical / Electronics

Other sectors may also be considered if they meet the criteria.
Supported Items:
• Machinery, equipment, and hardware
• Software acquisition
• Training, consultancy
• Certification, testing analysis, and product validation expenses

For detailed information; https://odsdanismanlik.com/tr/ticaret-bakanligi-kuresel-tedarik-zinciri-programi/

B) Design Product Development ProjectSupport Amount: 5,000,000 TL
Support Rate: 50%
Support Duration: 3 Years

Industry Sectors where the Design Product Development Support Project can be implemented;
• Design companies
• Design offices
• Collaboration organizations
• Firms engaged in commercial and industrial activities

Supported Items:
• Equipment, tools, materials, and software
• Website membership
• Personnel recruitment (designer, modelist, engineer)
For detailed information; https://odsdanismanlik.com/tr/tc-ticaret-bakanligi-tasarim-ve-urun-gelistirme-programi/

Ministry of Trade General Supports

• Support for Market Access Documents - 4,000,000 TL (50%)
• Support for Overseas Market Research - 100,000 TL per trip
• Support for Domestic and International Fair Participation (within upper limit)
• Overseas Promotion Support 4,000,000 TL 50%
• Support for Overseas Trademark Registration Purchase 750,000 TL (50%)
• Overseas Unit Support 2,000,000 TL (50%)
• Support for preparing market entry projects 200,000 TL (50%)
• Support for Acquisition of Brands Belonging to Overseas Companies and Companies Located Abroad 3,000,000 TL 50%
For detailed information; https://odsdanismanlik.com/tr/hibe-ve-destek-yonetimi-danismanligi/

2. What Are the Investment Incentives for the Defense Industry Sector?

Regional Incentive Support Elements and Rates for the Defense Industry Sector

* Investments in the defense field to be carried out based on project approval to be obtained from the Ministry of Defense
* Investments aimed at the production of products or parts developed as a result of R&D projects supported by the Ministry of Science, Industry and Technology, TÜBİTAK, and KOSGEB.
* Investments in testing centers, wind tunnels and similar projects (those related to automotive, space, or defense industries).
* Investments in defense fields;
Investment projects to be carried out with the approval of the Ministry of Defense, Electronic Warfare, Detection Technologies, Weapon Ammunition, Semiconductor Production and Design, Composite Technologies, Material Technologies, Cyber Security, Artificial Intelligence, Electronics/Avionics, Robotic/Autonomous Systems, and additionally test centers, wind tunnels, and similar investments in the defense industry can benefit from priority investment incentive certificate advantages.

* Supports have been provided even if they were carried out in the 1st, 2nd, 3rd, and 4th Regions, under the support implemented in the 5th Region. If these investments are made in the 5th and 6th Regions, support specific to their regions is provided.

What Are the Minimum Investment Amounts for the Defense Industry Sector?

o 3 million TL in the 1st and 2nd regions,
o 1,500,000 TL in the 3rd, 4th, 5th, and 6th regions.