New Delhi: Finance Minister Nirmala Sitharaman has promised that the Union government will offer relief to Global Capability Centres (GCCs) for the challenges they face in terms of taxation and transfer pricing rules in the country.
Sitharaman was delivering the valedictory address at the inaugural edition of the Global Capability Centers Summit Monday in New Delhi, organised by the Confederation of Indian Industry (CII).
In four sessions at the summit, representatives of GCCs discussed the multiple challenges they face over government taxation and pricing rules—managing indirect taxes like GST, navigating transfer pricing regulations, complying with permanent establishment (PE) risks, and addressing withholding tax obligations on foreign payments.
As the challenges were put forth to the minister, she acknowledged the need to provide necessary relief, wherever required.
GCCs, also known as Global In-house Centres or Captive Centres, are offshore units established by multinational corporations to perform strategic functions, leveraging global talent and cost advantages for innovation, product development, and driving core business functions. India is a prominent GCC hub, with cities like Bengaluru, Hyderabad, Chennai, Mumbai, and Pune leading the way. As of 2024, over 1,700 GCCs operate in India, according to a Nasscom-Zinnov India GCC landscape report.
When Sitharaman said that approximately 50 percent of all Fortune 500 companies have set up their GCCs in India, according to the data she received, she was informed that almost two-thirds of these companies have not yet established themselves in the country. She now plans to “invite the rest of them to come here”.
She went on to mention that the GCC sector contributes $68 billion to India in direct gross value addition—1.6 percent of the national GDP. She added that it is set to grow in the range of $150-200 billion by 2030, underlining the potential and scope of GCCs.
She also mentioned that 28 percent of global science technology engineering mathematics (STEM) individuals, and 23 percent of global software engineering talent are involved with GCCs, while 32 percent of the global GCC talent is currently based in India. As mentioned by speakers at the forum, many are returning to India and choosing to stay here due to the high-quality opportunities available in the country.
She lauded the GCCs for hiring 35 percent of female STEM graduates, making them a part of the workforce.
“Our talent is more cost-effective compared to other countries,” she said, adding that GCCs hire from within the country’s pool of skilled professionals. Referring to an estimate, she said that in India, “the operational costs are 30-50 percent lesser than in the UK, US and Australia giving the GCCs a lead advantage”.
Sitharaman further said that there is enough data to prove that GCCs are not “glorified BPOs” anymore, but have become centres for research, development, leadership and innovation resulting in alignment with start-ups.
Mentioning the Stanford AI Index Survey of 2024, she underlined that India is ready for artificial intelligence. According to the survey, since 2015, India has had the highest penetration of AI skills. Also, India has grown a whopping 263 percent in AI talent concentration since 2016, positioning the country as a major hub.
Referring to the United Nations Development Programme’s Human Development Index, the Union minister said that while in 2019, AI-specialised and talented individuals would want to leave the country and pursue careers abroad, as of 2023, 20 percent of Indian AI researchers choose to stay in the country.
She also mentioned the steps that the Centre is taking to boost the country’s potential in the field. Fellowship funds are being offered, particularly under the PM Kaushal Vikas Yojana to full-time PhD scholars specialising in AI in the top 50 NIRF-ranked institutions in order to enhance accessibility. Data and AI labs are being established in Tier 2 and Tier 3 cities. A model IndiaAI Data Lab has already been set up in the National Institute of Electronics and IT in New Delhi.
This is an updated version of the report.
Kasturi Walimbe is an alumna of ThePrint School of Journalism, currently interning with ThePrint.
(Edited by Mannat Chugh)
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