The government is likely to announce a National Mission on Nanotechnology in the Budget for 2005-06. The mission, with a corpus of Rs 200 crore (Rs 2 billion), will be housed in the Department of Science and Technology.

"It is expected to focus on basic research by government funded scientific institutions like the Indian Institutes of Technology and Indian Institute of Science. There is no proposal to involve the private sector as of now," said officials.

Nanotechnology, deals with activities at the level of atoms and molecules that have applications in the real world. It encompasses precision engineering, electronics, electromechanical systems as well as mainstream biomedical applications in areas like gene therapy, drug delivery and novel drug discovery techniques.

Many of the initial applications of nanotechnology are materials related, such as additives for plastics, nanocarbon particles for improved steels, coatings and improved catalysts for the petrochemical industry.

Usage is also widespread in computers, software and communications, the internet or mobile telephones.

The Confederation of Indian Industry had recently signed a memorandum of understanding with the National Research Coucil of Canada, for cooperation between small and medium enterprises in the fields of life sciences, renewable energy and joint development of industrial nanotechnology.