But the private sector still needed to invest heavily in research, they cautioned at a research and development seminar. Murli Manohar Joshi, minister for human resource development and science and technology, said latest surveys showed that the proportion of literate people in India had risen sharply in recent years.

The literacy rate, measured by the proportion of adults who can read and write, stood at 52 per cent in 1991 when the last population census was done. The next census is due in 2001. "By the end of 1997, India was 62 per cent literate, and by the end of 1999 we are reaching 65 per cent," Joshi said, adding that this signalled a big opportunity for the industry. India's population is about 960 million.

"It is being recognised that tomorrow's corporation will be a knowledge corporation," he said."The power and strength of a corporation will be determined by its knowledge, both in quantity and quality," he said.Speakers at the seminar identified information technology, biotechnology and telecommunications among the areas that offered strong growth potential for India in coming years. They cited India's current stock market darlings, software firm Infosys and pharmaceutical giant Ranbaxy Laboratories as pioneers of a new knowledge-centred trend expected to sweep the industry.

"Capital (foreign investment) will move towards places were risks are low and rewards are high," said Narayanan Vaghul, chairman of India's Financial giant, ICICI. "Where knowledge is, location (of industries) is going to move there." India's state-run educational institutions have traditionally had flimsy ties with domestic industry, but students have found big opportunities abroad, fuelling concern about "brain drain".