The Danish enzymes firm plans to build new laboratory and office facilities in Bangalore, thereby establishing R&D operations in India for the first time.
The company has noted that its business in Asia has grown significantly in recent years, and the growth in the Asian market for enzymes and microorganisms is expected to continue in upcoming years.
This theme was touched upon by European agriculture minister Mariann Fischer Boel at a conference on EU-India trade this week.
Fischer Boel told delegates at the conference organised by FICCI (Federation of Indian Chambers of Commerce and Industry) that the European Union remains India's biggest commercial partner - total trade between the two blocs grew from €26 billion in 2000 to almost €40 billion in 2005 - and that the EU is the largest foreign investor in India.
"You are one of our most important and valued partners in Asia, with whom we have an excellent mutual understanding," she said.
"The European Union is open for business with Indian companies.
There is enormous potential for joint ventures of many kinds."
Fischer Boel said that bilateral agri-food trade has potential to grow from its current level.
"Both sides have an interest in greater openness and trade, and we must translate these aspirations into policy," she said.
"This means pushing ahead with our negotiations for an improved broad based bilateral trade and investment agreement.
We look forward to launching these as soon as possible, following some very encouraging progress."
Novozymes already has sales offices in Bangalore, but the company claims that the facilities are becoming too small.
The new buildings are expected to be completed mid-2008 and will provide office and laboratory space for 50-60 employees in total.
Novozymes' new R&D unit in India will initially focus on optimising enzyme properties.
According to Torben Vedel Borchert, director of protein optimisation in Novozymes and responsible for the new department, the reasons for establishing R&D in India include the workforce and the academic environment.
"We are really looking forward to seeing a new R&D organisation grow in India," said Torben Vedel Borchert.
"There are a large number of skilled scientists speaking perfect English.
In the long term we also envisage the new unit as a natural bridge to Indian academic institutions and local biotech-companies specialised in protein optimisation and bioinformatics ."
Bangalore is often referred to as the "Silicon Valley of India", but is also known as a regional biotechnological growth centre.
The city hosts a number of reputable academic institutions and universities.