Israel’s defense industries are facing political and commercial headwinds, including the blocking of their booths at the Eurosatory arms fair in France, but they keep setting new records. According to SIBAT, the Defense Ministry’s export directorate, Israel’s defense exports reached about $19.2 billion in 2025, a record high. The Asia-Pacific region was the fastest-growing destination, rising from about 23% of exports to 32%.
Industry officials told Globes they expect Asia-Pacific’s share to keep rising, partly because of China and growing concern across the region that a Chinese invasion of Taiwan is a matter of “when,” not “if.” SIPRI data show Israel ranked seventh worldwide in arms sales over the past five years, with its share of global trade climbing from about 3.1% in 2016 to 4.4% in 2021-2025. India remained the biggest customer at 29%, followed by Germany at 21%, boosted by its 2023 purchase of Arrow 3 for about $3.5 billion, and the United States at 7.8%.
The article says much of the export growth came from partnerships in India under Prime Minister Narendra Modi’s “Make in India” policy. Elbit works with Adani on Hermes drones, Israel Aerospace Industries produces missiles with BEL, and Rafael develops weapons systems with Kalyani. Elbit executive Ran Kiril said that even at Eurosatory, despite Israeli companies being removed at the last minute, senior officials from the region met with them there.
Vietnam has also become more important, both as a supplier and as a customer. MODEL 4 signed an exclusivity deal with Dong Nam for precision machining, advanced castings, forging, electronic packaging and complex parts, and CEO On Golan said Vietnam’s plants have far greater machine capacity than those in Israel. Rafael and Elbit already have defense business there, and in February it was reported that Vietnam’s defense ministry signed a roughly $250 million deal with Rafael for Firefly loitering munitions, to be produced locally.
Looking ahead, SIBAT and companies see Japan, South Korea and possibly Australia as key markets. Japan’s defense budget has grown from $47.2 billion in 2022 to about $58 billion this year, and its military is seeking Israeli systems in electronic warfare, cyber, satellites and drones. South Korea is working with Israel on local integration of Israeli technologies, and in September 2025 Rafael signed with Hyundai Rotem to integrate Trophy active protection on the K2 tank and other platforms. Australia is interested in upgrading air defenses, while Israeli sales remain concentrated in air defense, radars, and electro-optics.
