The increasing appetite for mobile data services, and the growing willingness of mobile operators to offer them, has fueled a rise in the number of applications development startups in India.

A number of Indian mobile operators, including Bharti Airtel Ltd. (Mumbai: BHARTIARTL), Vodafone India , and Aircel Ltd. , have launched applications stores in the recent months, with Airtel, the country's largest mobile service provider, boasting 13 million downloads during the first four months of operation. (See Bharti Boasts App Store Success, Aircel Plans Mobile App Store, Tower Sale, Bharti Updates on App Store, Bharti Launches Airtel App Central, and CommunicAsia 2010: Storing Up App Trouble?)

In addition, Reliance Communications Ltd. has formed an alliance with GetJar Networks Inc. , one of the largest independent application stores in the world, while Motorola Inc. (NYSE: MOT) has formed a joint venture to launch a while-label apps store for carriers and handset makers. (See Motorola JV Preps App Store for Indian Carriers and Reliance Taps GetJar for Free Mobile Apps .)

All this, plus the growing availability of affordable smartphones and the impending launch of widespread 3G service, is leading to a proliferation of startups in the mobile applications development space. (See India Watch: The Road to 3G and India's Smartphone Battlezone.)

But it's not just the local opportunities that are driving the growth -- the apps development market has a low entry barrier for willing startups, and the developers are not just catering to the Indian mobile operators, but the global market too.

"Almost 25 percent of the new startups [in India] are in the mobile applications space," states Amarinder Singh, who recently organized the OCC Bangalore Mobile App Incubation Program. He is also credited with starting the Indian chapter of CoreObjects, which works with apps development startups.

One such startup is HazelMedia, which develops mobile applications products across a variety of devices and platforms. Incorporated in July this year, the company is "focusing on the financial services and healthcare verticals with our existing domain knowledge of these segments. From an operations model perspective, we are looking at SaaS [software as a service]" as well as other methods, says the startup's CEO and founder, Manish Malik.

It's tempting to compare this with the dotcom era -- when a number of companies started online businesses, secured venture capital funding, and then closed down operations because of lack of business -- as just like a decade or so ago, Bangalore is the hub of the startup activity in India.

What might be different this time, though, is that the market opportunity is more defined and the opportunities more concrete, and some startups have already developed meaningful businesses.

One of the Bangalore-based players is Aquilonis, which is among the few companies that spotted the potential of this market back in 2007.

The company, which decided to focus on vertical sectors least affected by the global economic slowdown (it has had success in the healthcare sector in the US, for example), is one of the sector's success stories and an inspiration for other Indian startups. "We are basically working on technology-agnostic solutions" that allow the transfer of data from corporate servers to mobile devices of any model, "and we're growing at 200 percent per year," says co-founder and CEO Rahuldev Rajguru, though the company's revenues are still in the sub-US$1 million bracket.

SourceBits is another well-established Indian developer in Bangalore. It provides design and development services for iPhone, iPad, and Apple Inc. (Nasdaq: AAPL) Mac environments, as well as other mobile operating systems (Android, Blackberry) and Web platforms. "Our business model consists of publishing apps and games for mobile platforms [and] providing mobile design and development services to Fortune 500 clients," says the company's CEO Rohit Singal.

An important challenge for these companies is to survive in what is becoming a very cluttered market. With so many startups, consolidation is on the cards. "For sure, there will be some consolidation. Having said that, an innovative startup will stand out in any form of competitive landscape," says SourceBit's Singal.

— Gagandeep Kaur, India Editor, Light Reading