Despite the Tsunami-ravaged start, this New Year promises to be yet another landmark one for India in more ways than one. The optimism on the economic front seems to be at an all-time high, and the stock market indices seem to support that.

Consumer spending seems to be showing no sign of abatement, with double-digit sales growth across such diverse sectors such as housing, automobiles, telecommunication, clothing and footwear, consumer durables, and leisure and entertainment.

Even the lagging FMCG sector seems to be finally picking up some growth again.

Infrastructural bottlenecks do seem to be cause of worry, but it seems that finally, the government is beginning to make some positive, concerted moves in focusing on developing the infrastructure, if one takes note of the slew of announcements and initiatives that have been undertaken in recent weeks pertaining to highways, airports, real estate/urban development, etc.

The icing on this year's cake could be provided later this month in the widely anticipated Budget.

However, to keep this virtuous cycle of optimism and growth moving, Indian businesses (and, wishfully thinking, the Indian government) have to become increasingly more innovative since both the opportunities offered to India today, and the challenges being faced by India and Indian businesses today are formidable and will therefore need very creative (and bold) initiatives.

Let me first start by listing out the plethora of opportunities that are becoming open to India. Brand India has, to the best of my knowledge, never been as globally strong as it is now.

From perpetually being seen as a country with immense potential, it is already being seen as a country finally on the move. Comparisons with China are now done by putting the two countries together to illustrate the dynamism of the two economies (versus others) rather than contrasting the two.

In this positive frame of mind, some bigger and some newer opportunities for India are appearing on the horizon.

While India's prowess in information technology has now been universally acknowledged, the positive rub-off is that more and more global enterprises are now looking at India as a potential source of very cost-effective research and development centres (across industries).

The potential market for such offshore R&D activity is difficult to estimate but could well be in the range of $100�200 billion in just a few sectors such as engineering, pharmaceuticals, and bio-medical, aerospace, energy, etc.

Manufacturing is another area where India is beginning to get recognition in the global arena, after having successfully withstood the potential challenge from the much-vaunted Chinese manufacturing sector.

A strong start has already been made in sectors such as the automobile components.

Textiles and clothing continue to retain strength to compete in the post-quota era, and notwithstanding the lack of sizeable investments in recent years to augment capacities, the next five years should see India doing very well in this sector, adding at least $25�30 billion to its output in that period. There are many other opportunities as well.

However, with these opportunities, there are many challenges as well. Indian businesses, by and large, have not been able to create any worthwhile global brands (barring the branding achieved by the IT sector per se and the top few companies in that sector).

Many examples of innovation such as Aravind Eyecare have not been taken outside India to similar markets such as China or the African and South American continent.

Even in terms of absolute scale, the total number of companies in India with revenues in excess of $2 billion is less than 20, with public sector behemoths making up most of this list.

It is in this context that Indian businesses now have to very innovatively leverage the very promising local and global opportunity.

The innovation has to be at all levels -- business structure, products, and processes. In business structure terms, partnerships and collaborations have to be seen beyond just control of assets.

Sharing brands, sharing research and development effort, sharing distribution channels, and sometimes sharing physical assets even with companies who otherwise could be competitors in some other segments have to be thought of.

Matsushita's recent alliance with Hitachi for a certain range of Plasma displays and entertainment electronics is one such example. For product innovation, the thinking has to move beyond merely hiring a few talented product/industrial designers or increasing the R&D budget.

Over years, many companies develop a DNA of innovation (such as Sony and Apple) that cannot be easily transplanted by merely recruiting some individuals or enhanced financial allocation.

Indian products, unfortunately, are yet not regarded as innovative or having cutting-edge design attributes.

Indian companies have to overcome this limitation by zeroing on creative hot-shops that may exist anywhere in the world, and making a bold bid for acquiring or partnering with them in order to make a jump start for product innovation.

As far as process innovation is concerned, Indian companies should go back to the drawing board to give a totally fresh look to their industry and their businesses, and wherever needed, discard old paradigms in favour of radically new ones.

One way to do so is to create an environment that encourages inducting brilliant thinkers both at the corporate board level as well as the operational level.

Thus far, most Indian businesses have limited themselves to attending seminars and lectures by some of the renowned gurus. This could be useful but only to a limited extent.

Businesses have to go beyond this, not only by getting some of these brilliant minds to remain engaged with such companies on a regular basis but also by forming partnerships/relationships with leading universities and think-tanks across the globe.

India, notwithstanding formidable (self-created) odds it has faced in the last many decades, has now an exceptional opportunity to have a rapid acceleration of growth.