The purpose of this paper is to evaluate the Indian Software Industry and t government's industrial policy by analysing the characteristics of the software industry, authority, development process, social infrastructure, and public sector. The Information age is creating profound changes in the way we live and work. It is transforming all aspects of society, stimulating new opportunities. Over the past decade, India has deliberately prepared itself to meet the new challenges of the information age. India became an important player in shaping world software industry. Through the industrial policy, Indian government is focusing on 1) the development of software industry, 2) dramatic increase in IT scientists engineers, and the promotion of education institutes, 3) the establishment of the software technology Parks (STP), 4) the inducement of foreign direct investment, 5) extensive standardization, 6) the coordination of the law and system. India has liberalized finance and telecommunications system in an effort to bring in more business, and has revamped education curriculums to encourage more creativity among students. Government has played crucial role in bringing India one of advanced software nation by presenting the grand vision and sophisticated plan, liberalizing telecommunication market, and enhancing the efficiency of bureaucratic system.