"More broadly, society needs to understand that innovation around entrepreneurship is about bubbling mix of entrepreneurship where things will go wrong for no particular bad reason and bankruptcy is not a stigma," Sanyal said after releasing the Ficci-PwC Strategy & India Manufacturing Barometer (IMB) survey.
"One of the frameworks is that we are going to get into the environment where we are much more innovative and it also means there will be more failures," he said.
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The country needs a culture of innovation and also requires a culture which accepts bankruptcy, he said, adding innovation is dependent upon some of it failing.
He further said that by nature small and medium enterprises are more flexible and could innovate much faster if given an opportunity.
The Ficci-PwC survey revealed that India continues to remain an economic bright spot. As per the United Nations, the world economy expanded only 2.2 per cent in 2016 - the slowest growth rate since the Recession of 2009.
But the outlook for the Indian economy and its core sectors continues to remain upbeat in 2016-17, it said, adding, as the government plans to undertake large-scale policy reforms, the overall economic climate remains favourable.
Sanyal said in India industrialisation was taking place at a time when manufacturing was changing radically, making old jobs redundant and giving way to new kind of openings.
Besides, the Indian economy was greatly dis-balanced as the services sector was dominant with agriculture and manufacturing sectors lagging behind considerably.
India's industrialisation was facing constraints from within due to issues in human capital and skilling, he noted.
Speaking at the event Surjit Bhalla, Chairman, Oxus Investments said that there is a need for reducing taxation and interest rates in India, which are almost double the rates in competitive markets such as Bangladesh.
India is growing at a fast pace but still much below its true potential, he added.