Let us begin by looking at the challenges and opportunities for Indian firms in new product development. I have been teaching the new product development course for the last eight years and we have been exploring issues of product development in India. Interest in new product development in the Indian context has been growing in large measure on account of the growing customer base and changing customer expectations. Possibilities of new product development exist in two areas–1) where there is potential to gain high margins by creating differentiated products with more features, and 2) where high volumes can be gained by creating good cost effective products for mass consumption in urban and rural markets. Into the former group would fall companies looking at niche products which have differentiated high end features and which cater to a market that is willing to pay a premium. But it is in the second area that Indian firms have a higher chance of success.