Israel - Country Commercial Guide
Aerospace and Defense
Last published date: 2022-08-12


Israeli defense spending averages approximately $15B-$18B per year (national funds). In addition, the United States provides Israel $3.3B annually in Foreign Military Financing (FMF). As of June 2022, Israel has 618 active Foreign Military Sales (FMS) cases valued at $26.4B.

The current U.S. military aid to Israel, covering FY2019 to FY2028 is $38 billion: $33 billion in FMF plus $5 billion in missile defense appropriations. Additional U.S. funding was allocated in 2016 for anti-tunnel capabilities that detect, map, and neutralize underground tunnels, and an additional one billion dollars was provided in 2022 to replenish Israel’s Iron Dome Missile Defense System.

Israel’s military and commercial activities with the U.S. defense industry are strong and include commercial contracts with major U.S. companies. The local industry sources quality components and sub-systems, presenting export opportunities to U.S. suppliers of high-quality components that can be integrated into Israeli systems. In June 2022, for the first time ever, a major U.S.-based defense company, Leonardo DRS, announced its planned acquisition of a significant Israeli defense technology company, RADA.

The country’s defense industry is dominated by three companies: Israel Aerospace Industries (IAI), Rafael Advanced Defense Systems (both parastatals), publicly owned, and Elbit Systems. The companies offer a diverse portfolio of products and services, including space and airborne reconnaissance systems, radar systems, UAVs, avionics and electro-optical systems, munitions, tanks and armored personnel carriers. They produce structural components and parts and operate maintenance, repair and upgrade facilities.  In addition, there are several hundred small and medium sized enterprises active in the sector.

Israeli defense exports hit a new record in 2021, totaling $11.3 billion, showing a 33% leap since 2020 ($8.5 billion), and a 20% increase compared to the previous record set in 2017, where defense exports reached $9.4 billion.

Israeli companies, including Elbit Systems, Rafael Advanced Defense Systems, IAI, and other defense industries sold defense systems and services to Morocco, Bahrain, and the UAE for $800 million, which illustrates the economic benefits to Israel since the signing of the Abraham Accords. That figure does not include IAI’s sale of the Barak-8 surface-to-air missile system to Morocco, a deal valued at $560 million, which will be included in the 2022 export figures. SIBAT, the International Defense Cooperation Directorate at Israel’s Ministry of Defense, estimates that Israel’s defense exports to Arab countries will cross the $1 billion threshold in 2022.

Israel’s main defense exports are missiles, rockets, and air defense systems (20%), such as the sale of Rafael’s Spyder system to the Czech Republic for $630 million; training and instruction services (15%), such as the deal between Elbit and the Hellenic Ministries of Defense to reconstruct its air force’s flight academy for $1.5 billion over a decade-long-period; UAVs and drones (9%), electronic radar and warfare systems (9%), and manned aircraft and avionics systems (9%). Sales of cyber and intelligence systems only comprise 4% of Israel’s overall defense exports.

While some European countries have declined to purchase Israeli weapons systems in the past, citing political reasons, Europe is now the largest regional destination for Israeli weapons systems sales following the Russian invasion to Ukraine, accounting for 41% of Israeli defense exports, surpassing Asian and Pacific countries, including India (34%). The U.S. only accounts for 12% of Israeli defense export sales, following Arab countries (7%), Africa (3%), and Latin America (3%).

Another prominent feature of the past year has been the increase in formal transactions carried out between countries and not between commercial Israeli entities and their paying customers. Such G2G transactions rose from $900 million to $3.4 billion in 2022.

Israel has a space research program with scientific and commercial goals and has developed indigenous launch capabilities. A space cooperation agreement with NASA in 2015 expanded cooperation in civil space activities. Israel’s space program is small but significant. The country’s first mission to the moon was in April 2019, that resulted in an unsuccessful lunar landing, however this event established Israel as the fourth nation to attempt to soft land on the moon. Israel’s national air carrier, El Al, has a fleet of 45 aircrafts, all manufactured by Boeing. El Al suffered major loses due to the pandemic, and in July 2020, announced a bailout deal from the Israeli government. Two months later, over 45% of El Al shares were bought by Kanfei Nesharim, a company owned by Eli Rozenberg. The Israeli government still holds a ~13% stake in the company. In April 2022, the first ever female CEO was appointed: Dina Ben-Tal Ganancia.

Local manufacturers procuring components that will be integrated in systems for export to third countries consider U.S. export controls a challenge. Local industry also benefits from Israel’s offset program, which is administered by the Industrial Cooperation Authority at the Ministry of Economy. Israeli industry has also benefitted historically from an option to convert 25% of U.S. Government FMF from dollars to shekels, which has enabled the Israeli Ministry of Defense (MOD) to spend FMF locally. The U.S. military aid program to Israel approved for 2019-2028 gradually eliminates that provision, which means that the MOD will have to spend the entire amount in buying weapons, systems, and defense equipment solely from U.S. companies. Local industry is concerned about the negative impact the change will have on SMEs but this will not affect the three largest defense contractors, who already have a presence in the United States.

Leading Sub-Sectors

Aircraft parts, air-control technology, electronic components for land, air and sea platforms, airborne and ground-based engines, electro-mechanical devices, microwave components, and sensors.


U.S. exporters are strongly advised to appoint a local representative to introduce their products and services to the Israeli military and aerospace & defense industries. The local representative can also provide business development services and after-sales support. For additional information about FMF tenders, please contact the MOD procurement office in New York City, at 

Vendor Contact Form: Contact Us - In addition to FMF-purchases, the MOD publishes local tenders that present limited sales opportunities for U.S. companies. The U.S. Commercial Service has access to the list of local tenders and can make information available to interested U.S. suppliers. Bidding on local tenders requires opening a local bank account and appointing a local representative.

For information about local MOD tenders, please contact Commercial Specialist Yariv Moravnik Shavitt at

The MOD’s International Defense Cooperation Directorate, SIBAT, publishes a directory of the Israeli defense industry that is a useful tool for U.S. exporters.


  • Israel MOD Mission to the U.S. (
  • SIBAT -HLS and Defense Directory (