An Israeli investor can invest in an Indian startup through equity shares, compulsorily convertible preference shares or debentures, or, for DPIIT-recognised startups, convertible notes of at least ₹25 lakh in a single tranche. Pricing must meet FEMA fair value rules, and the startup reports the investment on the FIRMS portal. Angel tax on share premium no longer applies from the 2024-25 tax year. Investor rights are set out in a shareholders' agreement and reflected in the articles.
- Document route
- Israeli notary, then apostille
- Time difference
- IST is 2.5 to 3.5 hours ahead
- Typical instrument
- CCPS with investor rights
- Reporting
- FC-GPR in 30 days; Form CN for notes
Investing in Indian Startups from Israel: how it works
We conduct legal due diligence on the startup: incorporation, cap table, ESOPs, IP ownership, key contracts, compliance with company law and FEMA, and litigation. Israeli investors are used to US-style terms; most can be adapted to Indian law, but some, such as certain liquidation preferences or guaranteed returns, face FEMA limits on assured exits. We draft or review the term sheet, shareholders' agreement and subscription agreement and amend the articles.
Closing documents are signed electronically or before an Israeli notary where required. The funds arrive through banking channels; the startup allots instruments within 60 days and files FC-GPR within 30 days. On exit, transfers between a non-resident and a resident are reported on Form FC-TRS within 60 days, and capital gains tax is withheld subject to the India-Israel treaty. Watch that the startup has kept earlier rounds compliant, since past FEMA breaches become your problem.
What clients in Israel should know
- Israeli funds investing frequently may consider registration as a Foreign Venture Capital Investor with SEBI, which offers some pricing flexibility in specified sectors.
- Downstream investment by an Indian startup that has foreign investment is itself treated as indirect foreign investment, which affects sectoral caps.
- Capital gains on exit are taxed in India under domestic law unless the treaty provides otherwise; plan the exit route with your Israeli tax adviser.
Step by step from Israel
Video consultation
A call at a time that suits Israel, after we have read your documents.
Documents signed in Israel
Israeli notary, then apostille
Work in India
Our team files, appears and follows up in India, and shares scans of everything filed.
Result and handover
Certified copies and originals are couriered to you in Israel where needed.
The full guide
This page covers what changes when you are in Israel. For the law, the documents and the step-by-step procedure, read our main page on Investing in Indian Startups, or see all services for clients in Israel and the Doing Business in India practice area.
Questions from clients in Israel
Can we invest through convertible notes?
Yes, if the startup is DPIIT-recognised and the note is at least ₹25 lakh in a single tranche, subject to FEMA conditions.
Is angel tax still a concern?
The share premium tax was abolished from the 2024-25 tax year onwards, but FEMA pricing rules still apply.
Can we invest in Indian rupees from Israel?
Investment is remitted from abroad and converted into rupees; the instrument and price are fixed in rupees.