Introduction
Traditionally, Global Capability Centres (“GCCs”) in India have been established by multinational corporations (“MNCs”) with their global headquarters outside India. However, as Indian companies expand their international presence, a question arises as to whether they can establish a GCC in India to support their global operations. This article examines the legal feasibility of establishing a GCC by an Indian (headquartered) company and whether such a structure may qualify for incentives under the GCC policies of selected States.
Can an Indian Company Set Up a GCC in India?
There is no general prohibition under Indian laws on an Indian company establishing a GCC in India. A GCC is not a separate statutory form of business organisation under Indian laws. Instead, it is an operating and organisational model through which a company establishes a dedicated centre to undertake specialised functions for its parent, group or affiliated entities.
As discussed in our earlier article in this series, from a structuring perspective, an Indian company may operate the GCC as a division or undertaking of an existing entity or establish a separate subsidiary, including a wholly owned subsidiary, to undertake the GCC’s functions. The choice of structure would depend on factors such as the segregation of liabilities, ownership and exploitation of intellectual property, inter-company arrangements, and the nature of services to be provided to group entities.
Accordingly, an Indian company may legally establish a GCC, with the principal considerations arising from how the centre is structured and the functions it is intended to perform. The absence of a separate statutory framework governing GCCs provides flexibility to Indian companies in determining the appropriate operating structure, whether through an existing entity or a separate subsidiary. However, this flexibility does not eliminate the need to assess the applicable corporate, tax, foreign exchange, data protection and intellectual property requirements. The decision to establish a GCC should therefore be approached not merely as an organisational exercise, but as a broader legal and regulatory structuring exercise aligned with the company's intended functions, group structure and global operations.
Should an Indian Company Set Up a GCC?
An Indian company’s ability to establish a GCC must be distinguished from its eligibility for incentives under a particular State’s GCC policy. State GCC policies may adopt definitions that are narrower than the general commercial understanding of a GCC. These policies are designed to attract and promote specified categories of capability centres. Accordingly, eligibility under the relevant policy must be assessed separately from the legal ability to establish the underlying business structure.
Under Haryana’s GCC Policy, a GCC is a captive centre established by an MNC or its parent, group or affiliate entities to serve internal global operations of such entities. The policy also restricts a GCC unit from providing services to unrelated third parties. Accordingly, the key consideration under Haryana’s policy is whether the proposed centre meets the policy’s definition and service requirements, rather than simply where the parent company is headquartered.
In contrast, Karnataka’s GCC policy requires GCCs to be established by MNCs headquartered outside India to serve their parent organisations. Accordingly, the policy imposes a restriction based on the location of the parent MNC, in addition to the requirements governing the GCC’s functions and services.
The Gujarat GCC Policy 2025–30 adopts an inclusive approach by expressly defining a GCC to include centres established by “multinational or domestic companies” to enhance operational efficiency. The policy recognises that such centres support their parent organisations by managing global functions, driving innovation and delivering value across sectors including financial services, engineering and R&D, technology, manufacturing and healthcare, with reliance on established projects such as GIFT City and Dholera. Accordingly, an Indian company may fall within the policy’s definition of a GCC, subject to satisfying the other applicable eligibility conditions. This provides a potential route for domestic Indian companies to establish GCCs in Gujarat and seek benefits under the policy. However, it is pertinent to note that falling within the definition of a GCC is distinct from satisfying the conditions for registration and incentives
From a feasibility perspective, Gujarat’s approach provides a comparatively favourable policy framework for Indian corporate groups seeking to establish a GCC within India while potentially availing themselves of State incentives. The express inclusion of “domestic companies” within the definition of a GCC reduces the ambiguity that may arise under policies requiring the parent MNC to be headquartered outside India.
Thus, Indian companies may setup a GCC unit in Haryana or Gujarat to avail the incentives under their respective GCC policies but the same would not be possible under Karnataka’s GCC policy. The ability to establish a GCC should therefore not be conflated with eligibility for GCC-specific incentives.
These differences reflect the varying investment promotion priorities of the States. Policies that expressly limit GCC eligibility to foreign-headquartered MNCs may be intended to attract foreign investment and integrate the State into global value chains.
Separately, a GCC, in its traditional sense and under certain State policies, is a captive centre whose services can only be utilised internally by its parent and group entities. For example, Maharashtra’s GCC Policy 2025 requires a GCC unit to provide services to its parent organisation and global affiliates. Mahindra Research Valley is an illustrative example of a captive R&D centre which supports the wider Mahindra Group and undertakes product development, engineering and technology innovation for the Group’s automotive and farm equipment businesses, demonstrating how an Indian corporate group can consolidate specialised capabilities within a dedicated centre to support its business operations.
Beyond the availability of incentives, the group as a whole should have a genuine requirement for a separate captive unit for internal purposes, and the overall commercial rationale for establishing a GCC should be assessed. An Indian corporate group should evaluate whether centralising functions such as technology, research and development, finance, engineering or other shared services in a dedicated captive unit would generate sufficient operational efficiencies, cost advantages and strategic value to justify the investment. The group should also assess the applicable eligibility conditions under the relevant State policy, including investment and employment requirements, eligible activities and the nature of services provided by the proposed GCC.
The commercial question for an Indian-headquartered group therefore has two parts: (i) whether it can centralise global functions, such as technology, research and development, engineering, finance and shared services in a dedicated captive unit in India, and (ii) whether that unit can access the incentives States have designed for GCCs. Factors such as the identity of the parent company, the entities served, captive service requirements, employment and investment thresholds, and application and commencement dates are not merely conditions for availing incentives. They also determine the scale, location, structure and economics of the centre. The business case should therefore be built with those conditions in view, and the legal analysis should test what the business case assumes.
Conclusion
An Indian company may establish a GCC in India, however, the feasibility of doing so depends on the proposed ownership and operating structure, the functions to be performed, the relationships between the GCC and other group entities, and the applicable legal and regulatory requirements. Separately, eligibility for GCC-specific incentives must be assessed under the relevant State policy in force, having regard to its definition of a GCC, eligible activities and other prescribed conditions.
The Haryana, Gujarat and Karnataka frameworks illustrate how State policies may adopt different eligibility criteria, particularly for Indian-headquartered groups. Accordingly, the decision to establish a GCC should involve an integrated assessment of its commercial rationale, proposed structure and operational requirements, alongside the eligibility conditions under the relevant State policy. Ultimately, the viability of a GCC will depend on whether the proposed model meets the group’s business objectives, complies with applicable law and satisfies the requirements for any State incentives the group intends to avail itself of.
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