Imagine this. You are at a mall in Noida, and suddenly your mobile beeps to tell you that a friend is in the neighbourhood.

Your phone, which has a location-based service provided by your mobile operator with the help of a specialised mobile value-added services (VAS) company, locates him as soon as he comes within a specified distance, giving you the option of catching up with him if you so desire.

This is just one example of what a mobile subscriber can expect from his phone in the near future. Canvas M, the mobile VAS specialist (a JV between Tech Mahindra [Get Quote] and Motorola), is currently experimenting with a 'person finder' application that could work across countries. Of course, for such applications the people involved must be subscribers to the location service and also agree to be searched.

Clearly, the mobile VAS industry has come a long way from ring-tones and screen-savers. Indian and foreign mobile VAS providers - and there are a host of them - say that India's mobile VAS market will grow 60 per cent to touch Rs 4,560 crore (Rs 45.60 billion) by the end of 2007.

Mobile VAS can be sorted under three heads: content, utility and advertising and marketing services. Milind Pathak, Co-CEO and country manager, Buongiorno, the Italian mobile media and technology company which set up office in India earlier this year, says that mobile music will grow.

"Full track downloads will increase as mobiles will be used as ipods." User generated content, community applications and interactive video services will also become popular.

Buongiorno, for instance, launched Soccer Addicts in the UK with O2 (a UK mobile operator), in which football fans record their video comments after the end of the matches and MMS them to the operator.

"The best contributions are edited and made available to all users of the football fan club as a three-minute video clip available for both streaming and downloading," says Pathak.

In gaming, multi-player games are on the cards. "You could be sitting at home playing a game on your mobile with people and friends who may not even be in the same country let alone the same room," says Jagdish Mitra, CEO, Canvas M.

However, the hitch is that some of these services need 3G networks, not immediately available in India, to give an evolved consumer experience.

Search will, of course, be a major utility application in the mobile space but mobile commerce will also be a key growth driver. Active Media's executive director Raj Singh says that text message transactions are already prevalent.

Both cinema and airline tickets can be booked through the mobile and collected by showing the confirmation on the mobile screen. "But for India, mobile money transfer could be a killer application."

Singh cites the example of Philippines where migrant workers send money home through messages on their families' mobile phones. He says that an Indian cellular operator is working on a similar facility, though the application requires several government clearances.

For Canvas M, too, mobile commerce is a major focus area. Its trials on a mobile swipe facility are on in Chicago. "If it works, it will enable you to swipe your mobile phone, like a credit card, at the Delhi Metro rail stations and toll bridges and money would get deducted from your account," says Canvas M's Mitra.

The application requires near field communications (NFC) enabled phones which will be launched in a year's time. "We are working on this solution with a credit card company called Discover in the US. These phones will have a chip and retailers will have readers to read the mobile chips," he adds.

In the advertising and marketing space, promotions will be a major VAS offering. Says Active Media's Singh, "We have our UK experience with Orange customers where we sent them cinema tickets - one for one free - on their mobiles." Mobile promotions could also be used to reward loyal customers.

For instance, a credit card company could send a mobile voucher/coupon, of, say, Rs 500 to be spent at a particular shop or restaurant. "Here the gratification is instant. You show the mobile screen and avail the offer," says Singh. Such loyalty schemes could be used by telecom operators as well once their subscriber numbers reach a critical mass.