The NSW government has announced the members of its newly formed Innovation Council which is charged with guiding the state's future economic growth.

Deputy premier John Watkins announced the appointment of 10 business and government leaders to the council, which will advise the government on initiatives to foster innovation-led growth.

The council is one of the promises announced during the state election campaign to advise the government on strategies to build the innovative capacity of the private sector.

"Innovation will be a key driver of our future international competitiveness, productivity, and economic development," Watkins said.

"We are committed to playing to our economic strengths, and recognising that innovation should not be confined to high-tech companies in the science and technology sectors.

"This focus will also guide the way we seek international partnerships."

This week NSW premier Morris Iemma met with business leader from India and China.

The government has selected five key areas and is mapping innovation opportunities and identifying possible barriers to innovation.

Watkins said NSW has a clear advantage in verticals such as: logistics and transaction services; financial services;entertainment, design and media; manufacturing; and resources, especially coal.

Chairman of the council is Steven Harker, managing director and CEO of Morgan Stanley Australia. He will be joined by Catherine Livingstone, former chair of the CSIRO and former head of Cochlear Pty Ltd, Professor Jonathan West, director of the Australian Innovation Research Centre and David Skellem, CEO of National ICT Australia.

Other members from industry include Greg Smith, director of Animal Logic and Mark O'Neill, former executive director of the Australian Coal Association.

Government members appointed to the council include: Robyn Kruk, director-general for the Department of Premier and Cabinet; John Pierce, secretary of NSW Treasury; Michael Coutts-Trotter, director-general of the Department of Education and Training and managing director of TAFE NSW.

Immediat goals for the council include boosting high level skill sets, reducing the cost to business of using science and technology, cutting red tape and working to support improved broadband for business.

Watkins said the council will work closely with industry groups as well as the NSW Government's Skills Council and Manufacturing Council.

The Innovation Council will meet regularly and be supported by a secretariat within the Department of State and Regional Development, headed by the newly-appointed director of innovation strategies Todd Clewett.

Australian organisations have made little progress towards improving their performance on innovation in the past 12 months, according to the Fujitsu Innovation Index 2007.