By Sanyam Goel
Every week now, another Fortune 500 name announces a new center in Bengaluru, Hyderabad, Pune, or Gurugram. Not a call center. Not a back office. A Global Capability Center — a fully owned extension of the parent company doing core engineering, AI, finance, and R&D work, not for a client, but for itself.
India already hosts over 1,800 of these centers, employing close to 2 million professionals and generating upward of $64 billion in export revenue a year — nearly 1% of the country’s GDP. By 2030, the sector is projected to cross $100 billion. And in the last two years, something has shifted: it isn’t just the talent pool and the cost arbitrage pulling companies in anymore. It’s the fact that, for the first time, the Indian government — both nationally and at the state level — has built a genuinely aggressive incentive architecture specifically designed to make setting up a GCC in India cheaper, faster, and more tax-efficient than almost anywhere else in the world.
If you’re a foreign company, or a foreign national exploring where to place your next capability center, here is what’s actually on the table.
1. State governments are competing hard for your investment
Following the Indian Union Budget 2025-26’s national framework encouraging states to attract GCCs, at least ten Indian states have notified or drafted dedicated GCC policies since 2024. The competition between them works entirely in your favor.
Capital subsidies are the starting point: most states reimburse a percentage of your fixed capital investment. Madhya Pradesh offers 40% (up to ₹15-30 crore depending on scale). Haryana offers 50% in Gurugram and 75% in other districts, reaching up to ₹150 crore for units that own their office space. Andhra Pradesh offers a 25% capital subsidy for early-stage GCCs.
Land subsidies follow a similar logic. Uttar Pradesh offers 30-50% land subsidies depending on region, with higher rates in Purvanchal and Bundelkhand designed to steer investment beyond Noida and Lucknow. Haryana offers 30-50% land subsidies specifically within its Transit-Oriented Development zones, while Odisha offers concessional land pricing as part of its GCC Policy 2025.
Stamp duty exemptions add further savings at the point of setup: Uttar Pradesh offers a 100% stamp duty exemption on land and office purchase or lease, Haryana provides stamp duty reimbursement on property purchases specifically for qualifying GCC units, and Madhya Pradesh offers 100% reimbursement of stamp duty and registration fees.
Reimbursement of operating expenses is often the most valuable ongoing benefit. Haryana reimburses 50-65% of eligible operational expenditure for five to nine years, Telangana offers rental and operational cost subsidies for up to five years, and Gujarat covers payroll subsidies of 25-50% of employee salaries.
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Employment-linked incentives reward hiring directly. Haryana pays ₹1 lakh per local employee per year for ten years. Gujarat offers hiring incentives of ₹20,000 per fresher, up to 30 hires annually, plus EPF reimbursements for women and other categories. Karnataka reimburses 100% of employer EPF contributions for six months for women and transgender employees, and offers a rental subsidy of ₹2,000 per seat per month for up to 24 months, plus a power subsidy of ₹1 per unit for five years.
R&D support is also on offer for centers doing more than transactional work: Gujarat offers grants of up to ₹10 crore for Centers of Excellence, and Haryana offers 50% reimbursement of R&D costs specifically for GCCs building product development, AI, or engineering research functions rather than pure service delivery — a signal that states want high-value innovation work, not just transactional operations.
Skilling support rounds out the package, with Karnataka’s Nipuna Karnataka program, Tamil Nadu’s graduate pipeline of over 500,000, Telangana’s TASK academy, and Gujarat’s anchor institutions, including IIM-A and IIT-G, all designed to keep your talent pipeline full, backed by internship stipend reimbursements and training subsidies of up to ₹50,000 per employee in several states.
The practical upshot: depending on which state and city you choose, you can realistically expect state incentives alone to reduce your effective setup and multi-year operating cost by 15-30%, on top of India’s existing cost advantage over the US or Europe.
2. GIFT City: A genuinely tax-free two decades
If your GCC’s activities touch financial services, fintech, insurance, asset management, or global treasury operations, GIFT City — India’s only International Financial Services Center, in Gandhinagar, Gujarat — deserves serious consideration on its own merits.
The headline benefit was just made dramatically better: Union Budget 2026 extended the IFSC tax holiday from 10 years to 20 years out of a 25-year block — a 100% income tax exemption on business income for two full decades. After the holiday period, income is taxed at a concessional flat rate of 15%, rather than the 25-35% that applies to a company operating outside the IFSC. Offshore banking units get the same 20-year structure.
Beyond the headline number, GIFT City units also benefit from full GST exemption on services within the IFSC, and zero Securities Transaction Tax and Commodity Transaction Tax on IFSC exchange transactions. A single regulator, the IFSCA, replaces the usual fragmentation across the RBI, SEBI, and IRDAI for these entities, and units can operate natively in foreign currency — USD, EUR, or GBP — eliminating rupee-conversion friction for a globally facing business. Global Treasury Centers also receive an exemption from deemed dividend provisions, which is specifically relevant if your GCC will handle intra-group financing or cash pooling for the parent.
This isn’t a small regional incentive — it’s India positioning GIFT City as a direct rival to Singapore and Dubai for financial services operations, with the added advantage of sitting inside one of the world’s largest domestic financial markets. It won’t fit every GCC — pure manufacturing or domestic-facing service centers don’t belong here — but for BFSI, fintech, fund administration, or insurance-facing GCCs, it’s arguably the single most powerful tax structure on the table anywhere in India today.
3. Zero GST on your service exports
A GCC providing services to its own overseas parent is, under Indian GST law, an export of services — and exports are zero-rated. In practice, this means your GCC can either supply services under a Letter of Undertaking (LUT) without paying GST at all, or pay GST and claim a full refund. Either route means the GST system imposes no net tax cost on the value your center exports back to headquarters — a meaningful difference from a domestic-facing business, which cannot recover GST in the same way.
READ: Laid-off H-1B workers return to India, face lower pay as Big Tech expands GCCs (July 9, 2026)
4. A corporate tax and transfer pricing regime built to reduce disputes
India’s standard corporate tax rate for companies is 22-25% depending on turnover and the tax regime elected, materially below the 35% that foreign companies face when operating outside preferential structures like GIFT City.
More importantly for a GCC specifically, the Union Budget 2026 substantially widened the safe harbor regime for transfer pricing — the mechanism that lets a captive GCC agree its cost-plus margin with the tax department upfront, avoiding the transfer pricing litigation that has historically been a genuine headache for foreign-owned Indian subsidiaries. The safe harbor threshold was raised from ₹300 crore to ₹2,000 crore, now covering over 1,000 existing GCCs, with a uniform 15.5% margin replacing the earlier patchwork of 17-24% rates depending on service type. Tax approvals under this regime are also moving toward automated processing for five-year blocks. For a CFO planning multi-year cash flow with certainty, this reduction in transfer pricing litigation risk is worth as much as many of the headline subsidies.
5. A word of honest caution on Section 80-IAC
You may have heard that India’s startup tax holiday under Section 80-IAC — a 100% tax exemption on profits for three consecutive years out of the first ten — is available to new entities in India, and wondered whether it applies to a newly incorporated GCC subsidiary. It’s worth being precise here rather than overselling it: 80-IAC is designed for genuinely new, DPIIT-recognized startups pursuing innovation or a scalable new business model, and it explicitly excludes any entity formed by splitting up or reconstructing an already-existing business. A captive GCC subsidiary — set up specifically to perform functions the parent company already carries out elsewhere — will generally struggle to qualify, since it isn’t an independent, original venture in the sense the provision requires. This is a benefit genuinely available to Indian-origin startups and, in some structured cases, to spin-off innovation units — but it isn’t something a standard MNC GCC subsidiary should build its financial model around without a proper eligibility assessment first.
6. 100% foreign ownership, no prior approval needed
For IT services and the great majority of GCC-relevant sectors, India permits 100% foreign direct investment under the automatic route — meaning no prior government approval is required to set up and fully own your Indian subsidiary. This is a genuinely liberal position by global standards and removes what is, in many other jurisdictions, a meaningful source of delay and uncertainty at the entry stage.
7. The talent argument, stated plainly
India produces over 2.3-2.5 million STEM graduates a year. This is the structural foundation every other incentive sits on top of — as one industry analysis put it, no subsidy can manufacture a skilled workforce overnight, which is precisely why states with genuine talent pipelines, such as Bengaluru’s software base, Hyderabad’s BFSI and biosciences base, and Chennai and Coimbatore’s engineering base, continue to dominate, even as newer entrants compete on fiscal terms. Companies get 30-60% cost savings on operations compared to the US or Europe, full ownership of the IP their India teams generate, and increasingly, genuine core engineering, R&D, and product ownership rather than support functions — over 70% of GCCs are now expected to run AI capabilities in-house by 2026.
8. Time zone and market-hours advantage
India’s time zone sits in a genuinely useful overlap position: enough working-hours overlap with Europe in the morning and the US East Coast in the evening to support real-time collaboration with both, while also sitting within reach of APAC markets. For a global GCC intended to provide near-continuous coverage across time zones, this geographic position is a structural advantage that a lower-cost but poorly positioned location, in a time zone with little overlap with either the West or APAC, cannot replicate.
READ: Survey: Indian workers returning from the US face lower salaries and fewer jobs (July 8, 2026)
9. A genuinely extensive tax treaty network
India has Double Taxation Avoidance Agreements (DTAAs) with more than 90 countries, reducing withholding tax on cross-border payments between your India GCC and its parent, and providing a clear, well-tested framework for how profits, royalties, and service fees are taxed across the two jurisdictions. For a company setting up its first India entity, this network of treaties — combined with India’s expanding safe harbor transfer pricing regime — substantially de-risks the ongoing cross-border tax relationship between headquarters and the GCC.
10. Government machinery built specifically to make this easier
This isn’t only about subsidies. The Ministry of Electronics and Information Technology is building a Single Window Portal specifically to streamline GCC approvals nationally, complementing state-level systems like Telangana’s TS-iPASS and Haryana’s AI-enabled Single Window 2.0. Invest India, the national investment promotion agency, exists specifically to walk foreign investors through market research, location selection, land procurement liaison, and the government incentive landscape — a genuine concierge service for exactly this kind of decision.
11. The map is expanding — and so is the opportunity
While Bengaluru and Hyderabad remain the dominant hubs, the real story of the next five years is Tier 2 expansion: Coimbatore, Indore, Jaipur, Vadodara, Bhubaneswar, and Ahmedabad are all now named as priority hubs in at least one state’s GCC policy, with states specifically offering their highest incentive tiers to companies willing to locate outside the saturated Tier 1 metros. For a company with genuine flexibility on location, this is where the largest incentive stacking currently exists — lower real estate costs, growing talent pools, and the top end of every state’s subsidy ladder.
The Bottom Line
No single incentive above is, by itself, the reason to choose India. Taken together — state-level capital and OPEX subsidies that can offset 15-30% of your cost base, a genuinely tax-free two-decade window in GIFT City for financial services operations, zero-rated GST on your service exports, a transfer pricing regime now built to avoid rather than invite disputes, 100% foreign ownership with no prior approval, and a talent and time-zone position that few other countries can match — India presents one of the more compelling total-cost-of-ownership cases available anywhere for a company building its next capability center.
The details matter enormously, though. Which state, which city, whether GIFT City fits your specific service mix, whether your structure genuinely qualifies for the incentives you’re counting on, and how your transfer pricing and repatriation strategy is built from day one — these are the decisions that determine whether the incentive stack described above is realized in practice or left on the table.
(Sanyam Goel is a director at Accorp Partners, a global consulting firm specializing in company incorporation, taxation, regulatory compliance, and cross-border business advisory. A Chartered Accountant (CA) and Certified Public Accountant (CPA), he has extensive experience advising startups, multinational corporations, and NRIs on business setup in India, FEMA compliance, RBI regulations, and international taxation. He frequently writes on corporate law, business expansion, and regulatory developments, with a focus on helping businesses navigate India’s evolving legal and compliance landscape.)