Understanding the National Framework for Global Capability Centers(GCCs) in India

Global Capability Centers (GCCs), also known as Global In-house Centers (GICs) or Captive Centers, have become integral to the global business strategies of multinational corporations (MNCs). These centers, primarily established in countries like India to leverage cost efficiencies, skilled talent, and technological infrastructure, have evolved from back-office support units to strategic hubs driving innovation, research and development (R&D), and digital transformation. In India, the GCC landscape has witnessed exponential growth, with over 1900 centers employing more than 1.6 million professionals as of January 2025, contributing significantly to the economy. To further amplify this growth and extend its benefits to emerging tier-2 and tier-3 cities, the Indian government announced plans for a National Framework for Global Capability Centers during the Union Budget 2025-26. This blog explores the details of this framework, its objectives, key components, and its potential impact on India's economic and corporate landscape.

The announcement of the National Framework for GCCs came during the Union Budget 2025-26, as highlighted by the Hon’ble Finance Minister. The framework aims to provide structured guidance to state governments to promote the establishment and growth of GCCs in emerging urban centers beyond traditional tier-1 cities like Bengaluru, Hyderabad, and Pune. Historically, these metropolitan hubs have hosted approximately 90% of India’s GCC talent base, leading to challenges such as talent saturation, rising operational costs, and infrastructure strain. The framework seeks to address these issues by encouraging geographical diversification, fostering equitable regional development, and positioning India as a global leader in the GCC ecosystem, projected to reach a market size of $99-105 billion by 2030.

The National Framework for GCCs is designed to achieve several strategic objectives:

• Geographical Diversification: Encourage the setup of GCCs in tier-2 and tier-3 cities such as Ahmedabad, Coimbatore, and Thiruvananthapuram to leverage untapped talent pools, lower operational costs, and improved quality of life for employees.

• Talent Development: Enhance the availability of skilled professionals by aligning educational curricula with industry needs and promoting upskilling initiatives in emerging technologies like AI, machine learning (ML), and blockchain.

• Infrastructure Development: Suggest measures to improve physical and digital infrastructure in smaller cities to support GCC operations, including high-speed internet, modern office spaces, and reliable utilities.

• Regulatory Streamlining: Simplify compliance and regulatory processes to reduce operational delays and create a business-friendly environment for MNCs.

• Industry Collaboration: Foster partnerships between government, academia, and industry to create a robust ecosystem that supports innovation, R&D, and sustainable growth.

• Economic Growth: Drive job creation, regional development, and foreign investment by making India an attractive destination for GCCs across diverse sectors like IT, automotive, healthcare, and financial services.

While the exact details of the framework are still evolving, insights from industry reports and government announcements provide a glimpse into its core components:

1. Policy and Regulatory Reforms

A cohesive regulatory framework is critical to the success of GCCs. The framework proposes streamlining compliance processes by introducing single-window clearance systems, as seen in states like Maharashtra and Tamil Nadu. For instance, Maharashtra’s IT/ITES Policy 2023 includes provisions for GCCs, such as setting up Centers of Excellence (CoEs) and offering incentives like capital subsidies and software license support. Additionally, the framework addresses challenges posed by India’s complex transfer pricing regulations, which govern profit margins for GCCs as related parties to their global entities. By simplifying these regulations, the government aims to reduce compliance costs and enhance ease of doing business.

2. Infrastructure Enhancement

Robust infrastructure is a cornerstone of GCC operations. The framework emphasizes investments in physical infrastructure (modern office spaces, reliable power supply) and digital infrastructure (high-speed internet, cloud capabilities) in tier-2 and tier-3 cities. This aligns with the Digital India Campaign, which aims to enhance connectivity and technological readiness across the country. States like Tamil Nadu have already introduced policies offering incentives for R&D centers and GCCs, including subsidies for product testing and prototyping facilities.

3. Talent Acquisition and Development

India’s vast pool of skilled professionals, particularly in IT, engineering, and analytics, is a key driver of GCC growth. The framework proposes collaborations with universities and industry bodies like NASSCOM to align educational programs with the needs of GCCs. It also emphasizes continuous training in advanced technologies to ensure a future-ready workforce. For example, cities like Bengaluru and Hyderabad have thrived due to their deep talent ecosystems, and the framework aims to replicate this success in emerging hubs by fostering partnerships with local academic institutions.

4. Incentives and Support for Tier-2 and Tier-3 Cities

To encourage GCCs to expand into smaller cities, the framework suggests fiscal and non-fiscal incentives, such as tax breaks, subsidies for infrastructure setup, and support for innovation labs. These cities offer advantages like lower operational costs, reduced attrition rates, and access to diverse talent pools. The framework also promotes the creation of innovation clusters and CoEs to drive R&D and technological advancements.

5. Governance and Collaboration

Effective governance is essential for aligning GCC operations with global business objectives. The framework advocates for robust governance practices, including clear KPIs, regular audits, and cross-functional collaboration. It also encourages partnerships between state governments, industry bodies like NASSCOM, and private consultants like Zinnov to streamline GCC setup processes and ensure long-term success.

The National Framework for GCCs is poised to have a transformative impact on India’s corporate and economic landscape:

• Economic Growth: By 2030, the GCC market in India is expected to employ millions and contribute significantly to GDP, driven by increased foreign investment and job creation in tier-2 and tier-3 cities.

• Regional Development: Expansion into smaller cities will reduce economic disparities, improve infrastructure, and enhance quality of life, fostering balanced regional growth.

• Innovation and R&D: GCCs will continue to evolve into innovation hubs, with companies like Microsoft and Goldman Sachs leveraging India’s talent for advanced R&D and digital transformation.

• Global Competitiveness: By positioning India as a strategic hub for GCCs, the framework will enhance the country’s reputation as a global leader in technology and innovation.

Challenges and Considerations

Despite its potential, the framework faces challenges, including the need for consistent policy implementation across states, addressing talent retention in smaller cities, and navigating global economic uncertainties. Additionally, ensuring seamless integration between GCCs and their parent organizations will require robust change management and cultural alignment strategies.

The National Framework for Global Capability Centers represents a forward-thinking approach to harnessing India’s potential as a global hub for innovation and business excellence. By promoting geographical diversification, streamlining regulations, and fostering collaboration, the framework aims to create a sustainable and inclusive GCC ecosystem. We Address Advisors, a leading real estate consultancy, play a crucial role in supporting GCCs by helping them identify and secure optimal office spaces across India, particularly in emerging tier-2 and tier-3 cities. Our expertise in navigating local real estate markets ensures that GCCs can establish operations in locations that align with their strategic and operational needs. As India continues to attract MNCs across sectors will drive economic growth, create jobs, and position India as a leader in the global business landscape.