ByMEITAL STAVINSKYAPRIL 16, 2026 08:27Israel’s defense tech industry has been growing exponentially over the last few years. A key target market for Israeli defense tech companies is the United States, with the US defense budget evidencing significant increases, generating tremendous procurement opportunities and driving private sector investment in technologies that support military operations.Recently, US President Donald Trump’s administration unveiled an unparalleled $1.5 trillion proposed defense budget. On April 21, key details about US military spending for the 2027 fiscal year, including the planned budgets for each of the military services, are expected to be released. While tremendous opportunities exist for innovative Israeli defense tech companies with battlefield-tested solutions that can address pressing challenges, the world's largest defense market is highly regulated and presents challenges to navigate. Two ecosystems, two mindsetsIn Israel, the defense establishment and the start-up ecosystem enjoy a relatively intimate relationship. Reservists with firsthand battlefield experience often drive new ventures, the Israel Defense Ministry's procurement pipeline is accessible, and regulatory approval cycles, while not trivial, operate on a national scale that allows for close dialogue between innovators and end-users.In the United States, however, while there are significant efforts to ease the adoption of innovative technologies and eliminate red tape, the continental-scale bureaucracy has a strong institutional bias toward developing and maintaining technologies domestically. Seeking US legal advice on corporate and regulatory compliance early-on is advisable.And yes, there is also the inevitable cultural gap. American defense procurement values process, documentation, and long-term relationship-building with a clear benefit for establishing US operations and local manufacturing capabilities.The Pentagon is seen from the air in Washington, DC, US, March 3, 2022. (credit: REUTERS/JOSHUA ROBERTS/FILE PHOTO)At the same time, Israel's robust innovation ecosystem, in areas such as advanced manufacturing, missile defense, cybersecurity, artificial intelligence (AI), and autonomous systems position it as a strategically significant partner.The Fiscal Year 2026 National Defense Authorization Act (NDAA) includes a provision directing the Defense Innovation Unit to establish a presence in Israel. The DIU, which serves as the Pentagon's primary conduit for accelerating the adoption of commercial and dual-use technologies, has historically only maintained a domestic footprint. The new mandate reflects a broader congressional intent to deepen the US' defense technology partnership with Israel.The regulatory landscape: ITAR, EAR, and export controlsIsraeli defense tech eyeing the US market needs to understand the two pillars of US export control law. The International Traffic in Arms Regulations (ITAR), administered by the State Department's Dir