The government is drafting a national policy for Global Capability Centers (GCCs) following tax reforms in the Union Budget 2025. This initiative, combined with the new 'GCC 50' recognition program, marks a shift in the sector toward high-value innovation and AI-driven operations. Investors should monitor how these policy changes affect regional expansion and talent demand.
India is working on its first comprehensive national policy framework for Global Capability Centers (GCCs), a move aimed at consolidating the country’s position as a global leader in high-value corporate services. This development follows tax reforms introduced in the Union Budget 2025, which simplified the regulatory environment for these entities. An inter-ministerial group is currently drafting the policy to formalize support for the sector, which now hosts over 2,100 centers across the country.
The policy focus comes as the industry undergoes a significant transformation. Traditionally viewed as cost-saving back offices, GCCs are increasingly evolving into hubs for innovation, artificial intelligence, and strategic product development. To highlight this shift, Fortune India and ANSR have launched 'GCC 50: India’s Most Admired Capability Centres 2026,' an initiative that evaluates centers based on their strategic contribution, governance, and innovation, rather than just headcount or operational size.
From a financial and regulatory perspective, the Union Budget 2025 was a turning point. The government consolidated various IT services, including software development and R&D, into a single category with a uniform safe harbor margin of 15.5%. This creates a predictable tax environment, allowing companies to plan capital spending with more clarity. Additionally, the government increased the safe harbor threshold to ₹2,000 crore, significantly reducing compliance burdens for large-scale operations.
The expansion of the GCC footprint is also creating new economic corridors. While hubs like Bengaluru, Hyderabad, and Delhi-NCR remain dominant, there is a visible move toward Tier II and Tier III cities such as Indore and Bhubaneswar. Several states, including Karnataka, Maharashtra, Gujarat, and Madhya Pradesh, have introduced their own policies to capture this investment, competing to attract both infrastructure and specialized talent.
Despite the positive momentum, the sector faces distinct challenges that market observers should track. The shift toward high-value AI and engineering roles requires a workforce with advanced skills, creating potential gaps that firms must address through heavy investment in reskilling. Additionally, the sector remains sensitive to global economic conditions and international trade relations, which can impact the growth of export-oriented services. Regulatory uncertainty during the policy drafting phase and the rising competition for infrastructure in smaller cities are other factors that could influence long-term profitability for companies operating in this space.
The next steps for investors will be to watch for the final release of the national GCC policy draft. Key monitorables include any specific incentives for centers operating in Tier II cities, updates on how the inter-ministerial group balances foreign investment needs with domestic talent requirements, and whether the uniform 15.5% margin helps improve the long-term cash flow and operational stability of these centers.