NASSCOM said its suggestions of giving loans to software product start-ups to cover high patenting cost and fiscal incentives for angel investors has evoked a "positive reaction" from the central government.

Speaking on the sidelines of 'Product Summit 2005' in Bangalore, National Association of Software and Service Companies (NASSCOM) President Kiran Karnik said the suggestions evoked a "positive reaction" and expressed hope that they would make announcements during the coming Union budget.

The government may not have to spend more than Rs 100 crore as support to product start-ups for filing global patents, he said.

The industry body had suggested extending loans to product companies who file for patents and if patent was granted, loan could be converted into grants or else be repaid.

As a fiscal incentive to angel investors, the government could work out a mechanism by which if a product fails, then it (government) would reimburse 60 per cent of the money invested by investor in it's development.

I-flex solutions CEO Deepak Ghaisas, who also chairs the NASSCOM product forum, said costs for filing a global patent -- whether it's successful or not -- was $25,000-30,000 which was big money for small and medium firms.

While India generated $17.2 billion through exports in 2004-05, Indian software companies have a miniscule 0.2 per cent share of the $180 billion global market, as per a NASSCOM data.

T R Madanmohan of Indian Institute of Management, Bangalore, said in 1999 there were just 16 companies in the product, which went up to 250 last year.

As per a sample study, only less than 16 per cent of Indian software companies opted patenting despite most having cutting edge intellectual property, he said.

"Product companies are unfortunately not darlings of the financial world", Madanmohan said, "but they are going to be innovation engines on which India will build its intellectual capital tomorrow".

According to him, revenues of Indian software companies were close to Rs 800 crore in 1999 while this year, it is expected to be Rs 1,860 crore.

It's projected to grow to Rs 2,500 crore by 2008 and Rs 3,500 crore by 2010, he said.

(www.financialexpress.com)