Introduction
The growth of Global Capability Centers (GCCs) in India has become increasingly significant, largely due to strategic initiatives led by both state and central governments. While state governments focus on tailoring specific frameworks to attract GCCs, the central government has played a pivotal role in establishing a conducive national ecosystem. Through a mix of startup collaboration platforms, industrial and financial incentives, and regulatory ease, these central initiatives have positioned India as a hub for GCCs, facilitating their establishment, operation, and expansion.
GCC-Startup Collaboration: A New Wave of Innovation
Modern GCCs are evolving into innovation powerhouses, focusing more on AI, analytics, and digital engineering rather than traditional back-office operations. This evolution necessitates ongoing collaboration with agile and specialized startups. The Indian government’s initiatives, such as the Gen-Next Support for Innovative Startups (GENESIS) launched by the Ministry of Electronics and Information Technology (MeitY) in July 2022, support this collaboration. With a budget of ₹490 crore over five years, the initiative provides pilot funding up to ₹40 lakhs, enabling startups to test solutions in partnership with corporates, including GCCs.
The GENESIS initiative primarily targets startups in tier II and III cities, allowing GCCs to expand cost-effectively beyond metropolitan areas. This aligns well with state-level initiatives, facilitating GCCs’ access to cutting-edge solutions in AI and deep tech while enabling their expansion into non-metro locations.
Industrial Incentives: Bridging Core Business and GCC Operations
To further bolster the establishment of GCCs, India has introduced the Production Linked Incentive (PLI) Scheme, launched in 2020. This scheme spans multiple sectors, including electronics, semiconductors, pharmaceuticals, and telecom, offering direct cash credits of 4% to 1% on net incremental sales over a base year for eligible companies.
The strategic intent behind the PLI scheme is to encourage multinational corporations to integrate their manufacturing units with GCCs in India, facilitating IT support, engineering design, and digital transformation. Such co-location optimizes global procurement, logistics, and inventory, minimizing delays and aligning global strategies with local manufacturing needs.
Regulatory Ease: A Supportive Infrastructure Ecosystem
Central to the GCCs’ rapid scaling and global operations are structured regulatory frameworks like the Special Economic Zones (SEZ) and Software Technology Parks of India (STPI) schemes. These schemes are designed to reduce entry barriers and support scalable operations by offering incentives such as duty-free imports, tax exemptions, and single-window clearance for approvals.
Additionally, the GIFT City International Financial Services Centre (IFSC) framework in Gujarat enhances the operational environment for GCCs by establishing a comprehensive international financial services ecosystem. This framework provides benefits similar to SEZs, combined with the flexibility of cross-border operations in foreign currency, thus enabling GCCs to function efficiently within India.
Conclusion
India’s central government initiatives have effectively supported GCCs across innovation, integration, and operational efficiency dimensions. With these strategic policies, GCCs are transforming from mere support centers to innovation hubs and strategic business units. By aligning with the dynamic needs of GCCs, India continues to solidify its position as a premier destination for GCC expansion.
The authors, Siddhi Ghatlia and Natiana Godinho, are legal professionals at ALMT Legal.
Disclaimer: The views expressed in this article are those of the authors and do not necessarily reflect the opinions of Bar & Bench.
