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Easier rules sought for overseas acquisition

India's software industry has asked the government to liberalise overseas acquisition rules, saying it foresaw significant buying by the country's growing software sector.

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Dewang Mehta, president of the National Association of Software and Service Companies, said in a statement that the industry wanted a removal of government approval for overseas acquisitions.

"We have requested the ministry of finance to liberalise its policies and allow Indian software companies to have the freedom to commit to an acquisition of an overseas company up to 25 percent of its market capitalisation or $500 million, whichever is lower," he said.

Indian software companies are currently allowed to make overseas acquisitions involving a maximum of $25 million.

Mehta said India's software industry would in the next few years use acquisitions as a growth strategy.

"If our demands are met, we can foresee at least $3 billion worth of acquisitions by Indian companies in the next 18 months."

The statement said NASSCOM expects software exports in 1999-2000 (April-March) to reach Rs 172 billion ($3.9 billion).

In June it had forecast the figure at Rs 167 billion, up from Rs 109.4 billion achieved in 1998-99.

Mehta said current market capitalisation for India's software industry was at a new high, which would aid acquisitions.

He said the current market capitalisation of around $24 billion, accounting for 19 per cent of the total market capitalisation on India's stock exchanges, was a unique opportunity for overseas acquisitions by Indian firms.

NASSCOM announced in another statement that it had decided to open an office in California.

NASSCOM's US services would include marketing, business contacts and venture capital information services, the statement said.

Reuters

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