I like to see more technology based niche companies in India. There are many areas like consulting, support for open source software, or a specific technology area like MVC or Azure where niche companies can operate.

The key to building niche companies is getting business. To get business, a domain expert is required, who has got great knowledge about the product or domain. Domain experts speak the language of the customer. They understand the requirements much better. They can prepare requirements document and test the final deliverable.

Aligning the business to a specific industry and specific geography can help. Common industries that are willing to spend a lot of money are banking, insurance, retail, pharma. Trendy industries are social networking and mobile apps.

Mini-products or solutions is a good way to show-case capability. Mini-products are highly customizable and extensible products that contain the base framework and allow a high degree of customization for individual customers.

Have light-weight process adherence and highlight it. Check agile in wiki for a list of agile methodologies. Pick one, prepare templates for it, and stick to it. CMMI is a good organization process framework whereas any agile methodology is a good engineering process framework.