Israel Defense Market Size Set to Touch USD 40 Billion by 2031

Published | 15 December 2025

Israel Defense Market is flourishing due to the escalating geopolitical tensions across the Middle Eastern, European, and West and East Asian regions and significantly increasing exports of advanced military systems and technologies.

BlueWeave Consulting, a leading strategic consulting and market research firm, in its recent study, estimated Israel Defense Market size at USD 31.77 billion in 2024. During the forecast period between 2025 and 2031, BlueWeave expects Israel Defense Market size to grow at a steady CAGR of 3.18% reaching a value of USD 39.54 billion by 2031. The growth of Israel Defense Market is driven by escalating regional geopolitical tensions with hostile countries (like Iran and Palestine) and organizations (including Hamas, Houthis, and Hezbollah), significant aid from the United States, heightened security imperatives, a surge in the investments in military operations with pronounced expansion, and growing arms exports from the country. On October 07, 2023, Hamas launched massive surprise attack on Israel and killed more than 1,300 people, injured 3,300, and took hundreds of hostages. On the following day, Israel Defense Forces (IDF) carried out a “complete siege” of Gaza. It is a significant rise in Israel-Hamas war. Consequently, the major increase in budgetary allocation for the military and exports has boosted the growth of Israel Defense Market during 2024-2025.

Opportunity – Rapid Adoption of Missiles & Missile Defense, Drone, and Uncrewed Systems

An increasing demand for missiles & missile defense systems, drones, and other unmanned systems presents a significant growth opportunity for the companies in Israel Defense Market. The country is rapidly adopting unmanned systems, such as long range missiles, unmanned aerial vehicles (UAVs), unmanned combat vehicles, and autonomous drones, for various military applications, such as surveillance, reconnaissance, search and rescue operations, and tactical missions. Unmanned systems are equipped with advanced sensors, 360-degree situational awareness capabilities, and autonomous technologies, enabling them to operate remotely or make autonomous decisions without human intervention. It enhances operational efficiency, reduces risk to personnel, and improves mission outcomes. Israel has been significantly active in the acquisition of drones ranging from large surveillance Hermes 900 to smaller, tactical First-Person View attack drones. The IDF is also developing drones with advanced intelligence, surveillance, and reconnaissance (ISR) and autonomous swarm capabilities in partnership with Elbit Systems and IAI. The Isreal Ministry of Defense is also investing in the acquisition and development of "Seek & Strike" swarms and advanced ISR with artificial intelligence.

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Impact of Escalating Geopolitical Tensions on Israel Defense Market

Intensifying geopolitical tensions could impact the growth of Israel Defense Market. Israel, in responding to heightened conflict risks and regional instability, is strategically bolstering its military preparedness, thereby driving a substantial surge in defense expenditures. This prioritization manifests in amplified budgetary allocations and strategic investments targeting cutting-edge defense technologies. Consequently, Israel Defense Market experiences a pronounced escalation in demand for sophisticated military assets, encompassing advanced aircraft, next-generation weapons systems, and robust cybersecurity solutions. Furthermore, the prevailing geopolitical uncertainties in its borders and the Middle Eastern and West Asian regions, accelerate the dynamics of arms races and foster the formation of strategic alliances, further augmenting market dimensions.

Missile Systems Lead Israel Defense Market by Type

The missile systems segment accounts for the major market share in Israel Defense Market by type. It is driven by the country’s strategic focus on enhancing secure its skies to ensure seamless coordination among defense units. The Isreal government is actively investing in advanced missile technologies, such as encrypted communication systems, satellite-based connectivity, and network-centric warfare solutions. Moreover, Israel's broader emphasis on cybersecurity and digital modernization in defense operations reinforces this trend.

Competitive Landscape

Major companies in Israel Defense Market include Aeronautics Ltd, Bet Shemesh Engines (BSE), Combatica, Elbit Systems Ltd, Elisra Group, Israel Aerospace Industries (IAI), Israel Shipyards, Israel Weapon Industries (IWI), Kela Technologies, Rafael Advanced Defense Systems, SIGA OT Solutions, Sky Sapience, and Tomer (IMI Systems). The presence of various companies intensify the market competition as they compete to gain a significant market share. These companies employ various strategies, including mergers and acquisitions, partnerships, joint ventures, license agreements, and new product launches to further enhance their market share.

Don’t miss the business opportunity in Israel Defense Market. Consult our analysts to gain crucial insights and facilitate your business growth.

The in-depth analysis of the report provides information about growth potential, upcoming trends, and Israel Defense Market statistics. It also highlights the factors driving forecasts of total market size. The report promises to provide recent technology trends in Israel Defense Market and industry insights to help decision-makers make sound strategic decisions. Furthermore, the report also analyzes the growth drivers, challenges, and competitive dynamics of the market.

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