GCCs Likely to Receive SOPs for Setting Up Units in Tier-2 and Tier-3 Towns.

The government is working on a new policy aimed at incentivizing the establishment of Global Capability Centres (GCCs) in tier-2 and tier-3 towns and cities across India, sources told ET. The policy, being developed by the Ministry of Electronics and Information Technology (MeitY), will provide additional incentives beyond those already offered by state governments where GCCs are located.

According to sources, some states have already introduced their own GCC policies, while others are in the process of doing so. The new policy will serve as an umbrella framework, clarifying regulations such as transfer pricing for GCCs and offering tax breaks to encourage their setup.

The policy is also expected to promote the development of large GCCs in towns and cities that can allocate dedicated office zones. For smaller towns and cities that may lack the land for large facilities, the IT ministry is considering incentives for smaller GCCs focused on specific sectors like healthcare and finance.

Industry body Nasscom projects that the GCC market in India will reach $100 billion by 2030, employing over 2.5 million people. As of fiscal 2024, GCCs in India are estimated to generate $64.6 billion in revenue and employ nearly 2 million people. Between Q1 2023 and Q4 2024, 124 new companies engaged in GCC deals, expanding office space for capability or R&D centres, according to Cushman & Wakefield.

Small and mid-sized companies have accounted for a significant portion of these GCC transactions, with 44% of new GCCs having annual revenues under $1 billion.

In addition to financial incentives, the new GCC policy will likely focus on talent-building, particularly in niche sectors such as generative artificial intelligence (AI), healthcare, and financial intelligence. Currently, nearly 90% of GCCs in India operate as multi-functional entities, handling technology, operations, and product engineering.

Engineering, research, and development (ER&D)-focused GCCs are growing at a rate 1.3 times faster than other GCCs, indicating a shift toward high-value capabilities. Over the next three years, more than 70% of GCCs are expected to integrate advanced AI capabilities, including machine learning algorithms and AI-driven customer support. Furthermore, 80% of surveyed GCCs plan to invest in cybersecurity training and AI-driven threat detection within the next five years, according to a report from consulting firm Inductus.

ET