The move will also help start-ups to participate in creating new open software source and generating jobs, he said.
"Many big platforms like Facebook also run on open software source. Therefore, we are making India's policy decisions to sync with the new movement world over."
The Minister said under the new policy, all future requests for proposals of e-governance projects shall include a mandatory clause for considering open source software (OSS) as a preferred option.
The new policy will also help in bringing down the costs of the government's ICT projects as a lot of licensing cost will be saved because of use of open source software, sources said.
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They added that the Minister has already signed the policy and it will be notified in the next few days and it will not require the Cabinet approval.
"The government of India has taken a major policy decision whereby we have resolved by policy to promote open software source as a preferred option in the government transactions and requests of proposal," the Minister said.
Usage of open source software (OSS) is cost effective, allows modification of source codes (key to any mobile/ computer programme or application) according to local needs and is free from royalty.
"By this policy having being adopted, now this has become mandatory to have a preferred option in governmental transactions and tenders to include open software source as a mandatory condition," Prasad said.
The Department of Electronics and IT (DeitY) has formulated the policy on adoption of OSS under which all government organisations must compare OSS and CSS options with respect to capability, strategic control, scalability, security, life time costs and support requirements.