India has emerged as the global capital for Global Capability Centers (GCCs), hosting over 1,700 centers as of 2024 and generating $64.6 billion in revenue. This remarkable transformation from a cost-effective outsourcing destination to a strategic innovation hub is largely attributed to comprehensive government support and well-designed incentive structures. The Indian government, both at central and state levels, has implemented robust policies that have attracted multinational corporations to establish their capability centers across the country, contributing significantly to economic growth, employment generation, and technological advancement.

Central Government Policy Framework

Special Economic Zones (SEZs): The Foundation of GCC Growth

The Special Economic Zones Act of 2005 serves as the cornerstone of India’s GCC incentive framework. SEZs provide unparalleled tax benefits that make India attractive for multinational corporations:

Income Tax Benefits:

• 100% tax exemption on export profits for the first five years
• 50% exemption for the next five years
• Additional 50% exemption on reinvested export profits for another five years

Customs and Service Tax Advantages:

• Zero customs duties on imported equipment, software, and raw materials
• GST exemptions for businesses providing services within SEZs
• Duty-free imports of capital goods and IT infrastructure

The success of SEZs is evident in their economic impact. According to a comprehensive study, SEZs have been instrumental in helping Indian exports move up the value chain, attracting quality FDI in terms of job creation and labor productivity. Case studies from major SEZs like Sri City and GIFT City demonstrate how these zones have transformed local economies, creating over 10,000 jobs in GIFT City alone.

Digital India and Make in India Initiatives

The Digital India campaign, launched to transform India into a digitally empowered society, has created a conducive environment for GCC operations. This initiative focuses on enhancing digital infrastructure, delivering services digitally, and promoting digital literacy – all essential elements for modern GCC operations.

The Make in India initiative encourages companies to manufacture and invest in India, indirectly supporting GCC establishment by promoting a business-friendly environment. These programs have enhanced India’s technological capabilities and connectivity, providing significant advantages for high-tech GCC operations.

Key Impact Areas:

• Enhanced digital infrastructure across tier-2 and tier-3 cities
• Improved internet connectivity and data security frameworks
• Streamlined regulatory processes for foreign investments
• Focus on skill development in emerging technologies

MeitY’s National GCC Framework

The Ministry of Electronics and Information Technology (MeitY) has formed an industry-led panel to develop a comprehensive national framework for GCC growth. This initiative, announced in the February 2025 federal budget, aims to:

Strategic Objectives:

• Guide states in promoting GCCs in tier-2 cities
• Enhance talent availability and infrastructure development
• Build regulatory reforms and industry collaboration mechanisms
• Transition from incentive-based approach to innovation-focused policies

The committee includes representatives from NASSCOM, Zinnov Consulting, ANSR, KPMG, and Invest India, ensuring comprehensive industry input. This framework is expected to address critical challenges including taxation issues, regulatory ambiguity, and uneven state-level incentives.

State-Level Incentive Programs

Karnataka: The Pioneer in GCC Policies

Karnataka became the first state to launch a dedicated GCC policy in November 2024, setting ambitious targets to attract 500 new GCCs by 2029. The Karnataka GCC Policy 2024-2029 aims to create 350,000 new jobs and generate an economic output of $50 billion.

Beyond Bengaluru Initiative:
The policy includes substantial incentives for GCCs establishing operations beyond Bengaluru:

Financial Incentives:

• Rental Assistance: 50% reimbursement of rent expenses, capped at ₹2 crore
• EPF Contribution Reimbursement: ₹3,000 per employee per month for two years
• Innovation Labs Funding: Up to 75% of capital expenditure, maximum ₹3 crore
• Property Tax Relief: 30% reimbursement for three years

Infrastructure and Innovation Support:

• ₹100 crore innovation fund for GCC-academia collaboration
• 21 Centers of Excellence with 14 already operational
• Global Innovation Districts development
• Fast-tracked connectivity approvals within 30 working days

Uttar Pradesh: Comprehensive GCC Framework

Uttar Pradesh’s GCC Policy 2024 targets establishing over 1,000 GCCs and creating more than 500,000 jobs. The policy offers attractive fiscal incentives:

Capital and Investment Incentives:

• Capital Subsidy: 25% of Eligible Capital Investment (ECI), up to ₹10 crore for Level-1 GCCs and ₹25 crore for Advanced GCCs
• 100% Land Subsidy: Complete exemption/reimbursement on land/office space purchase
• Interest Subsidy: 5% per annum on term loans for up to ₹1 crore annually for five years

Operational Support:

Payroll Subsidies: Support for hiring local talent

Operational Subsidy: 20% on operating expenses including lease rentals, bandwidth, and power charges

IPR Subsidy: 100% reimbursement of statutory fees for patent filings (up to ₹5 lakh domestic, ₹10 lakh international)

Other State Initiatives

Maharashtra is actively developing a dedicated GCC policy, leveraging its advantages in data connectivity, reliable power supply, and high density of data centers. The state has engaged with industry stakeholders to understand their specific needs and expectations.

Telangana has demonstrated remarkable success in attracting GCCs, with 14 new centers established between October 2023 and January 2024, including leading companies like Evernorth, Lloyd’s Banking Group, and Warner Brothers.

Madhya Pradesh’s GCC Policy 2025 aims to establish 250 new GCCs, attract investments worth ₹10,000 crores, and create 50,000 new jobs. The policy offers CAPEX subsidies up to ₹30 crore and patent assistance up to ₹30 lakh per international patent.

Tax Benefits and Financial Incentives

Corporate Tax Advantages

India offers competitive corporate tax rates specifically designed to attract GCC investments:

Reduced Tax Rates:

• 15% corporate tax rate for new manufacturing entities under specific conditions
• 22% standard corporate tax rate – significantly lower than many global competitors
• Tax deductions for R&D expenses under Section 35 of the Income Tax Act
• Export-oriented tax benefits for GCCs providing services to global markets

GST and Import Duty Exemptions

The Goods and Services Tax (GST) system provides several benefits for GCCs:

GST Benefits:

• Input Tax Credit (ITC) on services – GCCs can claim refunds on IT and telecom expenses
• Zero-rated GST for exports – Services to foreign clients qualify as exports and are GST-exempt
• Inverted duty refunds – Companies can claim refunds when input taxes exceed output GST

Customs Duty Relief:

• Duty-free imports of equipment and IT infrastructure for SEZ-based GCCs
• Reduced import duties on capital goods and machinery
• Custom duty waivers for high-tech equipment used in software development

Double Taxation Avoidance Agreement (DTAA) Benefits

India has DTAA agreements with 90+ countries, allowing GCCs to avoid double taxation:

Key Advantages:

• Foreign tax credit relief for companies taxed in multiple countries
• Lower withholding tax rates on international payments
• Reduced tax on royalty and technical fees payments to parent companies
• Capital gains tax relief for equity investments and shareholding structures

Infrastructure and Ecosystem Support

Software Technology Parks (STPs)

The Software Technology Parks of India (STPI) scheme provides additional benefits for GCCs:

STPI Benefits:

• Indirect tax benefits on imports, particularly beneficial for hi-tech equipment
• Duty-free imports enabling significant cost savings on procurement
• Single-window clearance for approvals, reducing bureaucratic delays
• Simplified compliance procedures for foreign trade policies

Skill Development Programs

The Skill India initiative, targeting training of 400 million individuals by 2022, ensures a steady supply of skilled professionals for GCCs. This program addresses the critical talent requirements of modern GCCs operating in areas like AI, data analytics, and cybersecurity.

Government Skill Development Support:

• Partnership with educational institutions for industry-oriented curricula
• Financial assistance for skill development programs
• Focus on emerging technologies like AI, machine learning, and blockchain
• Support for reskilling and upskilling existing workforce

Economic Impact and Success Stories

Quantifiable Economic Contributions

The economic impact of government support for GCCs is substantial and measurable:

Direct Economic Impact:

• $76 billion direct output in FY25, six times the 2010 levels
• 2.1 million direct employment with high productivity levels
• $68 billion direct GVA representing 2% of India’s GDP
• GVA per capita of $32,500 – 11 times India’s national average

Total Economic Activity:

• $241 billion total economic activity in FY25
• $61 billion through supply chain linkages
• $104 billion from induced consumption across the broader economy

Innovation and Patent Generation

GCCs have become patent powerhouses, contributing significantly to India’s intellectual property landscape. Government incentives for R&D and innovation have encouraged GCCs to invest in research and development activities, leading to:

• Increased patent filings from GCC operations
• Development of India-specific solutions with global applications
• Technology transfer and knowledge sharing initiatives
• Collaboration with Indian academic institutions and research centers

Success Stories and Case Studies

Carl Zeiss AG established its GCC in India, capitalizing on government incentives to create a significant R&D presence. The German technology company has leveraged India’s talent pool and supportive policies to expand its global operations.

Accenture employs over 300,000 professionals in India out of its global workforce of 700,000, demonstrating the scale of operations enabled by government support.

Goldman Sachs plans to expand its India GCC to 2,500 employees by 2025, showing continued confidence in the policy environment.

Challenges and Future Outlook

Addressing Regulatory Complexities

Despite significant success, challenges remain in the GCC ecosystem:

Current Challenges:

• Safe Harbor Policy limitations with 95% of eligible companies not opting for benefits due to litigation fears
• Regulatory ambiguity due to lack of uniform GCC definitions across ministries and states
• Complex tax structures including intricate transfer pricing regulations
• Uneven incentive distribution across different states

The Path Forward: Innovation-Focused Framework

Industry experts emphasize the need to transition from an incentive-based approach to an innovation-focused framework. The new national framework should:

Strategic Focus Areas:

• Technology transfer facilitation and local IP creation
• Cross-border industry-academia collaboration
• Integration with startup ecosystem for mutual benefit
• Unified policy approach across IT, hardware, GCCs, and deep tech sectors

Projected Growth and Expansion

The future of GCCs in India looks exceptionally promising:

Growth Projections (2030):

• 2,200+ GCCs expected by 2030, up from 1,700 in 2024
• $99-105 billion revenue generation compared to $64.6 billion in 2024
• 2.5-2.8 million professionals employed in the sector
• 3.5% contribution to India’s GDP by 2030

Conclusion

Government support and incentives have been instrumental in establishing India as the global GCC capital, hosting nearly 45% of all global GCCs. The comprehensive policy framework, encompassing central government initiatives like SEZs and Digital India, combined with progressive state-level policies from Karnataka, Uttar Pradesh, and other states, has created an unprecedented growth trajectory.

The success of this ecosystem is evident in the sector’s contribution of $64.6 billion in revenue and employment of 1.9 million professionals. As India prepares for the next phase of GCC growth, the focus on innovation, technology transfer, and tier-2 city expansion will ensure sustained growth while addressing regional development objectives.

The government’s proactive approach in forming industry-led panels, developing national frameworks, and continuously updating incentive structures demonstrates a commitment to maintaining India’s leadership in the global GCC landscape. With projected growth to $105 billion by 2030, government support will continue to be the cornerstone of India’s transformation into a global innovation and capability hub.

For organizations considering GCC establishment in India, the current policy environment offers unprecedented opportunities to leverage world-class talent, cost efficiencies, and comprehensive government support to achieve strategic business objectives while contributing to India’s economic growth story.

Top Skills in Demand Across Global Capability Centers in India