Nasscom demands ease in policy for overseas acquisitions

BANGALORE: National Association of Software and Service Companies (Nasscom) has demanded further liberalization in Government policies on acquiring software companies overseas. In a release, Nasscom President Dewang Mehta said, "We have requested Ministry of Finance to liberalize its policies and allow Indian software companies to have freedom to commit to an acquisition of an overseas company up to 25 per cent of its current market capitalization or US$500 million, whichever is lower." Nasscom has also demanded removal of prior approval for such acquisitions.

The organiastion has also called for full freedom for Indian companies to commit to an acquisition up to 25 per cent of its current market capitalization or US$ 500 million, whichever is lower. Indian software companies should have freedom to fund such acquisitions through the issue of an ADR/GDR or out of free cash flow. They should have freedom to pay for the acquisition through debt and to source the debt independently. As the liability to pay the debt is that of the company, no liability would devolve upon the country, the release said.

According to Nasscom, if acquisitions were made easier then they would prove to be a dynamic and important instrument of growth for the industry. Mr Mehta said,"if our demands are met, we can foresee at least US $3 billion worth of acquisitions by Indian companies in next 18 months."

Meanwhile, Nasscom announced that it would globalize its presence by establishing its offices in various parts of the world, to start with USA. Mr Mehta said, "Nasscom’s U.S. office would offer incubation, marketing, business contacts, networking, lobbying and venture capital information services. We realize that not all companies can afford to station their personnel in USA. However, with our US presence, we also plan to provide incubation facilities to young companies in India by facilitating their access to suitable investors and business partners."

The Nasscom office in USA is expected to become a meeting point between Indian software, Internet, E-Commerce companies with US clients, venture capitalists, academicians, angel investors and others. This decision to open office in USA is part of a strategy to bring Indian software companies closer to US investors, clients, venture capitalists etc. and also to put atleast 30 more Indian companies on overseas stock exchanges in next five years.