Italy's government has issued approval to the joint venture between state-controlled defense group Leonardo and Türkiye's powerhouse Baykar to produce unmanned aerial vehicles (UAVs), a report said Wednesday.

The deal, first announced in March 2025 and structured as a 50-50 partnership, aims to address Europe's weakness in the drone industry, with ⁠the two groups seeing a UAV market worth some $100 billion over the next 10 years.

The government cleared the partnership at a Cabinet meeting on Tuesday, Reuters reported, citing a source.

Under one of the approval’s conditions, sales of the drones and any further international development of the joint venture will be limited to countries politically aligned with Europe ⁠and NATO.

All technology used in the drones will be classified, the report said.

Italy exercised its so-called "golden power" rules, aimed at protecting strategic national interests in mergers and acquisitions, which allow ⁠the government to impose conditions or even block deals.

The agreement with Leonardo allows Baykar, one of the world's largest ⁠drone exporters, to access the European market and opens the way for expanded industrial activities in ⁠Italy.

The government approval of the joint venture was first reported by Italian daily Il Messaggero.

Baykar has meanwhile acquired Italian aviation and defense company Piaggio Aerospace in late 2024.

The Istanbul-based company has become one of the most prolific drone exporters after having gained prominence through their use in multiple conflicts.

It produces light and heavy drones, as well as developing autonomous jet-engine-powered ones, and is betting on autonomous air-to-air combat drones taking over the role of fighter jets.