Towards the late 1980s, India had almost written off its manufacturing industry as it continued to clock in a "slow" performance year on year. It was in the early 1990s, with the economy opening up, that our industry recognised that "quality" is critical to compete in the global market, thanks to some inspiration from Japanese companies.

Few leaders, such as Suresh Krishna, founder chairman of TPM Club India, and V Krishnamurthy, chairman of the National Manufacturing Competitiveness Council and then chairman of Maruti, set in motion the quality journey through ISO certification.

Today, 18 years later, India can proudly claim to have 15 Deming award-winning companies, one Japan Quality Medal winner, and 111 TPM Excellence awarded companies - amongst the highest tallies worldwide outside Japan (China has no Deming winners and only 11 TPM Excellence award winners).

Today, the Indian manufacturing sector is globally recognised amongst the most competent for "global contract manufacturing" with many companies making India their manufacturing hub.

These include companies such as the Tata group, Mahindras, Nokia, LG, Bajaj, TVS and others. To quote Carlos Ghosn, president, Renault, "Indian automotive and component industry is most competitive globally for its ability to design and plan 'frugal' products."

However, there is also a growing realisation that quality is taken as "given" across the world and very easy for competition to catch up with. Moreover, companies also need to realise that the era of licensing technology is petering out as latest technologies become inaccessible. These environmental factors are making innovation a critical necessity for survival. Innovation has to be looked at as the next wave for Indian industry to adopt!

With this backdrop, the Confederation of Indian Industry launched the Mission for Innovation in Manufacturing in May 2006. This mission initiated the CII-BCG Survey to ascertain India Inc's innovation readiness.

The results of this survey, which were announced at the first CII Global Innovation Summit, are encouraging, with 91 per cent of Indian companies assigning top priority to innovation.

What the CII-BCG Survey has also revealed is the fact that though almost 60 per cent of the respondents are dissatisfied with their return on investment in innovation, paradoxically almost 74 per cent are still keen to increase their investment in innovation.

The fact that whilst industry clearly understands the advantages of investing in innovation, there is a mismatch in what people think is innovation and what it actually is. To add to this is the lack of training in the process of innovation.

There are essentially two types of innovation - organisation driven and market driven. For instance, Amit Chugh's entrepreneurial innovation that has led him to create a leading-edge technology in lighting and non-conventional energy sources, which will power villages in India. This is a market-driven innovation.

On the other hand, when Thermax developed packaged boilers, it was a market-driven innovation. The company was unable to export them to customers due to inadequate infrastructure in India. Thermax then innovated and created an assembly facility at the port for export, with the result that it was able to start exporting in 1994, and since 2002, it has earned $72 million.

So we as companies need to understand our organisations and markets and then develop ideas for innovation. Innovation, according to Quality guru Shoji Shiba, does not mean only developing new products/services/ processes. Innovation always begins with the breakthrough idea, which must come from the top management or be fully supported by the top.

Good ideas often get killed because of resistance. Therefore, for innovation to be successful within an organisation one need to be a visionary leader, develop an ambidextrous organisation and the environment must provide the societal infrastructure that encourages innovation.

CII's Mission for Innovation in Manufacturing is working on all these fronts through its multi-pronged roadmap. The mission aims to create at least 100 innovating companies by 2009.

Dr Surinder Kapur is chairman, CII Mission for Manufacturing Innovation, and chairman and managing director, Sona Koyo Steering Systems