Executive Summary
Global Capability Centres (GCCs) have emerged as critical strategic hubs for multinational corporations (MNCs) seeking to leverage India's deep talent pool, cost advantages, and growing digital ecosystem. India now hosts over 1,700 GCCs employing nearly 1.9 million professionals, spanning IT, R&D, analytics, finance, HR, and other specialized services. The India–UK Comprehensive Economic and Trade Agreement (CETA), coupled with domestic reforms such as GST, the Digital Personal Data Protection Act, and sector-specific incentives, creates unprecedented opportunities for GCCs to optimize operations, protect intellectual property, and facilitate talent mobility.
From a corporate business perspective, GCCs must carefully evaluate their legal and operational structures—whether as Wholly-Owned Subsidiaries, LLPs, Branch Offices, or Liaison Offices—ensuring compliance with FDI, FEMA, tax, labour, and data protection regulations. The India–UK CETA strengthens this environment by providing tariff reductions, expanded services access, IP protections, and enhanced visa and mobility provisions, enabling GCCs to streamline cross-border operations and integrate UK–India collaboration into their global strategies.
To capitalize on these opportunities, GCCs should align their corporate structures, immigration and talent strategies, supply chains, and IP portfolios with both domestic and bilateral trade frameworks. Leveraging state-level incentives, IFSCA/GIFT City regimes, and emerging data protection norms will further enhance operational efficiency and competitive advantage. GCCs that strategically navigate this complex regulatory and commercial landscape will be positioned not merely as cost centres, but as innovation-driven hubs that contribute to global business growth, knowledge transfer, and digital leadership.
Introduction
Global Capability Centres (GCCs), which are essentially offshore
back-end business units of multinational corporations (MNCs)
providing specialized services (IT support, R&D, analytics,
finance, HR, etc.), have proliferated in India. India now hosts
over 1,700 GCCs employing approximately 1.9 million people,
attracted by its vast talent pool and cost advantages. According to
the World Economic Forum, India is the world's fastest-growing
major economy, with a booming middle class and rising import
demand.
In this context, the signing of the recent India–UK Comprehensive Economic and Trade Agreement (CETA) will deepen market access for GCCs. The India–UK Vision 2035 highlights CETA as a milestone "to boost economic growth in both countries and support jobs." Under CETA, the UK will eliminate tariffs on 99% of Indian exports and expand services-sector access (e.g., engineering, accounting) beyond existing WTO commitments. Together with India's own reforms—such as the introduction of GST, various business incentives, and the Digital Personal Data Protection Act—CETA sets the stage for GCCs to leverage visa facilitation, IP protections, market access, and regulatory harmonization on a scale not seen under previous bilateral arrangements.
Indian Legal Framework for GCCs
Corporate Structure:
A foreign firm can establish a GCC in India as a Branch Office, Liaison Office, Limited Liability Partnership (LLP), Joint Venture (JV), or Wholly-Owned Subsidiary (WOS). In practice, most MNCs favour a WOS (private company). Liaison offices function as cost centres with restricted activities and cannot generate income in India. Branch offices have the broadest operational scope, as direct extensions of foreign companies, generally performing all activities permitted to the parent except direct retail trading and manufacturing, subject to RBI approval. Branch offices can conduct consultancy, service delivery, R&D, imports, exports, and more, enjoying full profit repatriation rights after paying local taxes (e.g., technical consultancy, IT services). In contrast, a WOS or LLP (also governed by RBI/FDI rules) can undertake broader operations.
FDI in India is sector-specific, with varying caps and routes (automatic or government approval), determined according to the FDI policy and sector regulations. For instance, insurance, multi-brand retail, and broadcasting require government approval, while IT, services, and most manufacturing sectors allow 100% FDI under the automatic route.
All entities must comply with the Companies Act 2013. Any foreign entity with a place of business in India, whether as a branch, liaison office, project office, or any form recognized as having a business presence, must file the foreign company form with the Registrar of Companies (RoC) under Section 380. This filing is not required for wholly owned subsidiaries or joint ventures set up as Indian companies (private limited or LLP), as these are treated as Indian entities and are subject to Indian filings only. Filing the foreign company form is mandatory only when the overseas entity directly establishes a place of business in India. Under Section 2(42) of the Companies Act, a foreign company is one incorporated abroad with a place of business in India. Indian law allows full repatriation of branch-office profits, subject only to Indian income tax.
Foreign Exchange & Investment:
India's Foreign Exchange and Management Act (1999) and FDI Policy regulate inbound investments. MNCs must comply with FEMA/FDI rules on equity caps and entry routes. FEMA defines capital account transactions, and the RBI mandates filings for foreign equity. Certain sensitive sectors remain closed or capped (e.g., atomic energy). Otherwise, most GCC investments qualify for the automatic FDI route. Investors must also note RBI restrictions on capital from certain countries and ensure sectoral caps are observed. A GCC's internal transactions (e.g., cost-sharing, service fees) must be at arm's length to avoid permanent establishment issues under Indian tax law.
Income Tax – Permanent Establishment:
Under India's tax framework, a foreign corporation is taxable in India only if it has a Permanent Establishment (PE) here. Recent Indian case law favours GCCs. In e-Fund Corporation Ltd. v. CIT, the Supreme Court held that merely outsourcing support functions to India (through an affiliate) did not create a PE. The court held that an Indian subsidiary's back-office work was only "support" and not part of the foreign parent's main revenue-earning activity. Consequently, the parent's global income was not taxable in India. This precedent suggests that routine GCC activities alone may not trigger a taxable PE, provided the parent's core business is not carried on in India.
Labour & Employment:
India recently consolidated its labour laws into four codes covering wages, social security, industrial relations, and safety. While complete implementation of the codes is pending, GCCs will eventually have to comply with these codes and central/state labour regulations (e.g., hiring rules, working conditions) once they become operational. Typically, GCC employees are on Indian employment contracts subject to Indian labour law unless hired as consultants. Strategic planning is needed to manage workforce mobility under both domestic law and any CETA provisions on temporary movement.
Intellectual Property (IP):
Protecting innovations is critical. India's IP regime includes the Patents Act 1970, Trademarks Act 1999, Copyright Act 1957, and Designs Act 2000. GCCs should register all key IP (patents, trademarks) in India and include robust IP-assignment clauses in employee and vendor contracts. The India–UK CETA includes an IP chapter reaffirming protections for copyrights, trademarks, patents, GIs, and trade secrets. Once in force, it will strengthen cross-border IP enforcement and may also include cooperation mechanisms. GCCs should review CETA IP commitments (e.g., patent term extensions or trademark recognition) to optimize their strategy. The IP chapter also improves transparency and procedural fairness, streamlines patent processes, expands geographical indication protections, and establishes mechanisms for ongoing alignment and enforcement beyond existing laws.
Data Protection and Privacy:
Digital data flows are vital for GCCs. India's Digital Personal Data Protection Act, 2023 (DPDPA), enacted in August 2023 but pending full implementation, regulates the collection, processing, and transfer of "digital personal data" and applies extraterritorially to foreign entities offering goods or services to Indians. Any GCC handling personal data of Indian residents (even if stored abroad) will fall under the DPDPA. Cross-border data transfers are permitted by default unless restricted by the government. GCCs should prepare for compliance regarding consent requirements and data-security standards.
For comparison, Singapore's PDPA (2012) shares many concepts with India's DPDPA, including "deemed consent" and "voluntary provision" analogous to Singapore's "deemed consent by conduct." GCCs must navigate multiple privacy regimes—India's DPDPA and partner-country laws—to ensure harmonized compliance.
International Financial Services Centre (IFSCA):
India's IFSCA Act 2019 allows GCCs to establish operations in Gujarat International Finance Tec-City (GIFT City) under the special "Global In-house Centre" Regulations (2020). This regime offers tax exemptions (income tax, GST) and a relaxed regulatory environment for financial, tech, and support operations. Many GCCs are exploring GIFT City to combine India's cost advantage with a liberal regulatory framework.
Historical Context and Global Trade Rules:
India–UK trade ties have evolved through WTO and bilateral channels prior to CETA. Under WTO's General Agreement on Trade in Services (GATS), trade in services—including Mode 4 (movement of natural persons)—provides the baseline. Mode 4 covers temporary business travel by service providers, such as intra-company transferees and specialist consultants. GATS allows member states to regulate entry and stay; it does not confer firm residency rights. The India–UK CETA essentially "locks in" the status quo of those commitments. India's GATS offers have been relatively liberal on duration and coverage, but CETA may open new bilateral possibilities, such as guaranteed multi-year stays for Intra Company Transfer (ICTs).
Before CETA, India maintained bilateral trade dialogues with several partners. The India–UK Vision 2035, launched alongside CETA, frames this deal as part of a long-term strategy for "diversified cooperation," reflecting a shift from short-term WTO negotiations (e.g., aborted Doha Round) to deeper Free Trade Agreements (FTAs). The WTO framework underpins the deal—CETA's tariff schedules and service commitments build on each country's WTO schedule—but CETA goes beyond, offering greater legal certainty and sector-specific liberalization.
Historically, the UK was India's 11th-largest trading partner (2.4% of UK trade in 2024). The new agreement is projected to increase bilateral trade by approximately $34 billion annually by 2040. It is the UK's most significant post-Brexit FTA and India's first major post-WTO FTA. This context—from WTO liberalization of Mode 4 services to Vision 2035—underscores why GCCs should actively engage with the agreement.
Practical Steps for GCCs to Leverage CETA
Align Immigration Strategy:
GCCs must map staffing plans to CETA mobility commitments. For intra-company transfers between India and the UK, employees must meet grade/salary criteria. GCCs should file for visas early (e.g., UK intra-company transfer visa) under the Global Business Mobility scheme and maintain corporate sponsorship licenses (UK) or employer registrations (India) to ensure that key personnel can travel for the CETA-guaranteed duration.
Business Visitor Provisions:
CETA preserves short-term business visas. GCCs should plan client meetings, negotiations, and tech transfers as "business visits" (up to six months) under provisions such as the UK's Standard Visitor route. Conference visas and business visas serve distinct purposes with separate requirements. Conference visas are for attending international conferences, seminars, or workshops and may require prior clearance for certain participants or locations, while business visas under the UK Standard Visitor route allow Indian professionals to conduct short-term activities like client meetings, contract negotiations, trade fairs, and technology transfers, provided they carry invitation letters and avoid impermissible work such as direct employment or hands-on labour.
Securing IP Rights:
GCCs must audit IP portfolios across both countries. They should consider registering new trademarks or filing patents in the partner country to benefit from treaty protections. Joint innovations with UK teams can leverage CETA's IP chapter for cross-border patent applications or GI protection.
Optimizing for Tariff Benefits:
GCCs importing or exporting hardware or components can optimize supply chains to maximize tariff-free access. Goods must meet Rules of Origin criteria to claim duty-free entry. CETA's simplified customs procedures enable faster clearance of IT equipment or prototypes through paperless filing, advance rulings, and single-window clearance systems. Combined with self-certification-based Rules of Origin, GCCs can streamline supply chains and expedite customs processing within 48 hours.
Coordinating for Data Transfers:
Although CETA does not include a full GDPR adequacy clause, mutual commitments on digital trade facilitate data flows. GCCs must ensure that data-sharing agreements and consent forms comply with India's DPDPA and the UK GDPR. Any anticipated data localization requirements should be planned for, and technical measures such as encryption and cloud segmentation should be applied. The UK's Data (Use and Access) Act 2025 (DUAA) complements CETA commitments by introducing flexible rules on automated decision-making, enhanced data sharing, and stronger powers for the Information Commissioner's Office, enabling GCCs to operate under both regimes lawfully.
State Schemes and Incentives:
In addition to CETA benefits, GCCs should apply for state-level incentives such as stamp-duty waivers, training grants, and R&D subsidies. Combining these with tariff and visa advantages will amplify CETA's impact.
Our Analysis
India's regulatory environment is evolving to support the rise of GCCs. The combination of progressive domestic laws and international agreements such as the India–UK CETA positions the country towards a knowledge and digital-driven future. For GCCs, the opportunity lies not only in compliance but also in strategic advantage. Those that effectively navigate India's complex legal ecosystem—managing entity structures, protecting data, and optimizing tax strategies—while leveraging CETA's benefits on trade, IP, and talent mobility will stand out. The India–UK CETA, in particular, opens a "knowledge corridor" that, when strategically utilized, can become a powerful engine for growth.
This corridor allows GCCs to move beyond cost-arbitrage models and become hubs of innovation. With the right vision, GCCs in India can lead in emerging areas such as AI, analytics, cybersecurity, and sustainable technologies, positioning themselves as leaders in the global digital economy.
Of course, this opportunity comes with challenges. The regulatory landscape is increasingly complex, intersecting corporate, financial, labour, data, and IP laws, all while global standards around tax, data protection, and ESG are rising. To succeed, GCCs must invest in strong governance structures, upskill compliance teams, and explore safe innovation pathways, particularly in emerging ecosystems like GIFT City. Detailed documentation of data flows, intra-group transactions, and cost allocations is no longer optional; it is essential for withstanding scrutiny from both Indian and international regulators.
On the talent front, Indian GCCs have a strong advantage. The growing supply of STEM talent, combined with expansion into tier-2 and tier-3 cities, creates a robust foundation. CETA's provisions on easier talent mobility and mutual recognition of qualifications further expand the global opportunities for Indian professionals. GCCs that integrate diversity, equity, and inclusion (DEI) into their people strategies not only meet ESG goals but also build stronger, more agile teams capable of global collaboration.
India's knowledge economy is at an inflection point. The longstanding and evolving UK–India relationship, which has weathered tariff wars and global trade turbulence, underscores the importance of bilateral partnerships in minimizing potential trade imbalances and fostering sustainable economic growth. For GCCs, the path forward is not just about compliance but about leadership. In this context, the India–UK CETA assumes vital importance, providing GCCs with a platform to innovate, scale, and lead in the global digital economy.
Authored by Kaustubh Mehta (Assistant Manager – Strategy & Business Development), with inputs from Soumya De Mallik (Partner).
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