In a survey of 485 senior executives worldwide carried out by Hong Kong-based Economist Intelligence Unit, Japan has emerged as the world's most innovative nation in terms of business practises, followed by Switzerland, US and Sweden.

India has been ranked at 58th position, ahead of China's 59th position in a ranking of 82 economies, based on their level of innovation during 2002-06.

According to the study released on Wednesday, the top four economies are set to maintain their position during 2007-2011, while China will move up to 54th position, overtaking India.

India would also rise in the ranking, but not as much as China and would be positioned at 56th rank in 2011.

The study further found that both China and India were breaking out of their position as members of the under- developed world.

The US emerged as the country with best conditions for innovation, followed by India at the second position, UK at the third and Japan at the fourth.

However, China is likely to have more favourable conditions for innovation than India in the next four years, the study found.

"While it is still not as efficient at innovation as India, the huge sums of money it is pouring into R&D and education will ensure that it climbs steadily up the rankings, leaving India behind," it added.