India has solidified its position as a premier destination for Global Capability Centers (GCCs), attracting companies from the USA, the Middle East, and multinational corporations.

As of 2024, India hosts over 1,800 GCCs, contributing approximately $64.6 billion in revenue, with projections to surpass $100 billion by 2030.

This growth is driven by India’s skilled talent pool, cost advantages, and supportive government policies. Recent developments, such as BlackRock’s plan to hire nearly 1,200 professionals to expand its support hubs in Mumbai and Gurugram, underscore the country’s appeal as a strategic hub for global operations.

To further enhance its attractiveness, the Indian government offers a range of incentives and support mechanisms for GCCs. These include tax benefits, investment-friendly policies, and the establishment of Special Economic Zones (SEZs). Understanding these incentives is crucial for companies aiming to establish or expand their GCC operations in India.

 

National-Level Incentives for GCCs in India

The Indian government has introduced several national policies and incentives to attract and support Global Capability Centers (GCCs). These incentives focus on tax benefits, investment ease, and operational cost reduction, making India a preferred destination for multinational companies (MNCs).

Special Economic Zones (SEZs) Benefits

SEZs are designated areas that offer tax benefits and regulatory relaxations to businesses operating within them. Many GCCs, IT firms, and financial services companies prefer SEZs due to their economic advantages.

Income tax exemptions:

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

Customs and service tax benefits:

  • No customs duties on imported equipment, software, and raw materials.
  • GST and service tax exemptions for businesses providing services within SEZs.

2. Software Technology Parks (STPs) Scheme

The Software Technology Parks of India (STPI) initiative helps technology-driven GCCs by providing regulatory and financial benefits.

  • Indirect tax benefits: Companies in STPs enjoy exemptions on import duties for IT infrastructure.
  • Duty-free imports: Firms can import capital goods duty-free, reducing costs on equipment and technology upgrades.
  • Simplified compliance: STPs provide single-window clearance for approvals, reducing bureaucratic delays.

3. Foreign Direct Investment (FDI) Liberalization

The Indian government allows 100 percent foreign direct investment (FDI) in GCCs in various sectors, including IT, banking, financial services, and healthcare.

  • No prior approval is required for most sectors under the automatic route.
  • Relaxed labor laws in IT parks and GCC hubs enable easier workforce management.
  • India’s digital infrastructure growth aligns with MNCs’ need for secure, scalable, and high-speed networks.

4. Production-Linked Incentive (PLI) Scheme

Although primarily aimed at manufacturing and electronics, the PLI scheme extends benefits to AI-driven and fintech-based GCCs.

  • Encourages investment in AI, machine learning, and digital transformation projects.
  • Provides cash incentives based on incremental sales of high-tech services.
  • Focused on expanding tech-driven GCC capabilities beyond IT into engineering, R&D, and financial services.

 

State-Specific Initiatives for GCCs in India

In addition to national incentives, several Indian states have introduced state-specific policies to attract and support Global Capability Centers (GCCs). These policies focus on financial incentives, infrastructure development, and talent growth, making certain regions more attractive to multinational companies.

1. Karnataka: Expanding the GCC Ecosystem

Karnataka has the highest number of GCCs in India, with over 500 centers in Bengaluru alone. The state government has announced aggressive expansion plans to support new GCCs and double their number by 2029.

  • Financial Incentives: Companies setting up new GCCs can receive tax benefits, infrastructure support, and grants.
  • Tech Parks & Innovation Hubs: The government is investing in new technology parks across Bengaluru, Mysuru, and Hubballi to provide office space and IT infrastructure.
  • AI and Research Grants: Special funds are allocated for AI, machine learning, and deep-tech innovations within GCCs.

2. Telangana: A Proactive GCC Hub

Hyderabad has emerged as a leading GCC destination, and the state government actively supports foreign investment and corporate expansion. Telangana’s IT and GCC policies focus on ease of doing business, tax breaks, and digital infrastructure growth.

  • Financial Subsidies: Rental and operational cost subsidies for new GCCs for up to five years.
  • University-Industry Collaboration: State universities update their curricula regularly to meet GCC hiring needs, ensuring a ready talent pool.
  • Infrastructure Boost: Hyderabad’s IT corridor and industrial parks provide world-class office spaces with seamless connectivity.

3. Andhra Pradesh: New GCC Policy for Growth

Andhra Pradesh recently announced an IT and GCC policy to attract multinational corporations by offering strong financial incentives.

  • Capital Subsidies: Up to 25 percent of capital investment reimbursement for new GCCs.
  • Rental Lease Benefits: Companies can avail of 50 percent rent reimbursement for the first three years.
  • Early Bird Incentives: Additional financial benefits for the first 20 GCCs that establish operations in the state.

4. Gujarat: GIFT City – India’s Financial Hub

Gujarat International Finance Tec-City (GIFT City) is India’s first international financial services center (IFSC). It is positioned as a global financial and fintech hub, attracting GCCs in the banking, insurance, and investment sectors.

  • Tax Benefits: Companies in GIFT City enjoy 10-year tax holidays on profits from financial services operations.
  • No GST on Offshore Services: GCCs serving overseas clients from GIFT City receive a 100 percent GST exemption.
  • Regulatory Flexibility: Companies benefit from simplified business regulations, making it easier for global firms to operate.

5. Tamil Nadu: Strong Government Support for GCCs

Chennai has emerged as a preferred GCC destination due to state-level policies that encourage IT and R&D expansion.

  • Employment-linked Incentives: GCCs creating new jobs receive financial support based on workforce size.
  • Infrastructure Investments: New business parks are being developed in Chennai, Coimbatore, and Madurai to support growing demand.
  • Green Energy Initiatives: The Tamil Nadu government provides subsidized power for IT and GCC facilities using renewable energy sources.

How These State Incentives Benefit Foreign GCCs

For companies from the USA and the Middle East, these state-level incentives offer:

  • Lower setup and operational costs due to subsidies and tax benefits.
  • Access to a skilled workforce with state-sponsored talent programs.
  • Improved ease of doing business through regulatory support and infrastructure investment.

These state-specific initiatives enhance India’s appeal as a top destination for global corporations planning to establish or expand their GCCs.

Upcoming National Policies to Support GCCs in India

The Indian government is working on new policies to attract more Global Capability Centers (GCCs) and expand their presence beyond metro cities. These upcoming initiatives focus on tax incentives, infrastructure development, and support for smaller cities.

1. Incentives for GCCs in Tier-2 and Tier-3 Cities

While Bengaluru, Hyderabad, and Pune remain major GCC hubs, the government aims to decentralize operations by encouraging MNCs to set up centers in smaller cities.

  • Tax Benefits: Companies expanding to tier-2 and tier-3 locations may receive corporate tax reductions and GST rebates.
  • Infrastructure Grants: The government is investing in IT parks, better connectivity, and office spaces in cities like Indore, Jaipur, and Coimbatore.
  • Employment Incentives: GCCs hiring local talent in smaller cities could qualify for salary subsidies or recruitment grants.

2. Single-Window Clearance for Foreign Investment

To streamline the approval process for foreign companies setting up GCCs in India, the government is introducing a single-window clearance system.

  • Faster approvals: Reducing the time for business setup and operational licenses.
  • Simplified compliance: MNCs can complete all regulatory, legal, and tax registrations in one place.
  • Easier land acquisition: Faster allotment of SEZ and IT park spaces for new GCCs.

3. New R&D and AI-Focused Incentives

The Indian government is expanding support for R&D-driven GCCs, particularly in artificial intelligence (AI), fintech, and deep tech.

  • Funding for Innovation: The government plans to co-fund AI research and product development within GCCs.
  • Patent and IP Protection: Companies engaged in intellectual property (IP) creation will receive legal and financial support.
  • Collaboration with Universities: New policies will encourage partnerships between MNCs and Indian research institutes.

4. Expansion of GIFT City’s Financial Incentives

Gujarat’s GIFT City is set to expand tax benefits and simplify financial regulations to attract more banking, insurance, and fintech GCCs.

  • Extended tax holidays for global firms setting up offices in GIFT City.
  • Regulatory relaxations to encourage offshore banking and cross-border financial transactions.
  • Additional fintech incentives for companies specializing in blockchain, AI, and digital payments.

Why These Policies Matter for Foreign Companies

For MNCs from the USA and the Middle East, these upcoming national policies offer:

  • Lower costs with tax incentives and infrastructure subsidies.
  • Faster setup through simplified approval processes.
  • Expansion opportunities beyond metro cities with government-backed support.

These initiatives align with India’s vision to become a global hub for GCCs, ensuring a business-friendly environment for foreign corporations.

Conclusion

India is rapidly becoming a global hub for GCCs, offering cost efficiency, skilled talent, and strong government support. The combination of national incentives, state-specific initiatives, and upcoming policies makes India an attractive destination for multinational corporations (MNCs) from the USA and the Middle East looking to set up or expand their Global Capability Centers.

The key takeaways for companies considering India as their GCC base include:

  • National-Level Benefits: Tax holidays in SEZs, STP schemes, and FDI-friendly policies make India one of the most business-friendly countries for foreign firms.
  • State-Specific Incentives: Karnataka, Telangana, Andhra Pradesh, Tamil Nadu, and Gujarat are leading the way with targeted financial incentives, infrastructure investments, and employment benefits.
  • Upcoming Policies: Future tax breaks, investment subsidies, and expansion into tier-2 and tier-3 cities will further enhance India’s appeal.
  • GIFT City’s Potential: As India’s first financial hub, GIFT City offers global banking, fintech, and investment firms a competitive alternative to international financial centers.

For MNCs from the USA and the Middle East, India’s pro-business policies, growing economy, and government support make it an ideal location to establish and scale GCC operations. The next decade will see significant expansion in India’s GCC ecosystem, and companies that enter now will gain first-mover advantages in talent acquisition, infrastructure, and policy benefits.

 

Frequently Asked Questions (FAQs)

1. What are the primary tax benefits for GCCs in India?

GCCs operating in Special Economic Zones (SEZs) can avail of 100 percent tax exemption on export profits for the first five years, 50 percent for the next five years, and an additional 50 percent exemption on reinvested export profits for another five years. GIFT City also offers a 10-year corporate tax holiday for financial service firms.

2. How do state-specific policies enhance the attractiveness of certain regions for GCCs?

States like Karnataka, Telangana, Andhra Pradesh, Tamil Nadu, and Gujarat offer additional financial subsidies, rental lease benefits, and infrastructure support. For example, Andhra Pradesh provides a 25 percent capital subsidy and 50 percent rental reimbursement for early-stage GCCs.

3. What upcoming national policies should GCCs be aware of?

The Indian government is developing tax incentives for GCCs in tier-2 and tier-3 cities, a single-window clearance for foreign investment approvals, and AI-focused R&D incentives. These initiatives will reduce operational costs and improve MNCs’ business efficiency.

4. Why is GIFT City considered a strategic location for financial GCCs?

GIFT City is India’s first international financial services center (IFSC) with tax breaks, regulatory flexibility, and GST exemptions on offshore services. It provides a global business environment for banking, insurance, and fintech GCCs.

5. What key factors drive MNCs to establish GCCs in India?

  • Cost-effectiveness: India offers lower operational and talent costs compared to Western countries.
  • Skilled workforce: India has a large pool of tech, finance, and AI professionals.
  • Government support: Tax benefits, relaxed FDI norms, and infrastructure investments make India business-friendly.