Published Tue, 10 Feb 2026 | Updated Tue, 10 Feb 2026 Startup
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India is one such country which continues to remain on the top spot of most desirable countries globally for multinational companies to establish their Global Capability Centers (GCCs). In the last decade, the country has seen its rise as a high-end destination not just for outsourcing but even for strategic part of operations through number of global companies establishing their GCCs in India in technology, finance, R&D etc.
A Global Capability Centre (GCC) is the unit of any large multinational corporation that operates as its offshore subsidiary, in which that corporation undertakes sourcing of services from other entities and performs activities related to:
Unlike a conventional outsourcing model, a GCC is empowered to support and drive the overall global strategy of the parent company, becoming part of it rather than an external partner.
The Indian GCC network has expanded considerably, with over 1,700 active GCCs, with close to 2 million professionals employed, and expected to keep on growing through 2030.
Key advantages:
Establishment of a GCC therefore requires understanding of foreign companies with the Indian legal frameworks at the center and state levels.
Foreign companies can undertake a GCC in India through the following forms of corporate entity:
1. Private Limited Company (Fully-Owned Subsidiary)
The most preferred structure for setting up a GCC, as the business enterprise is owned 100% by the parent company and has the complete power to implement strategies and policies in full control -while bringing home profits without hassles of levy on remittance.
2. Limited Liability Partnership (LLP):
This structure allows some flexibility and is less onerous in compliance, so appropriate to GCCs that are smaller scale or function-specific GCCs
3. Branch Office/Liaison Office
Activities of these offices are restricted only to support, coordinating or representative roles. These entities, however, are not allowed to do a complete commercial activity as well require prior approval of the Reserve Bank of India (RBI) and offer low operating flexibility which may not be conducive for large or scalable operations in GCC.
From all of these, the most preferred type of GCC is the Private Limited Company since
Also read - Comparative Analysis of Liaison Office, Branch Office and Project Office
An entity formed in India for establishing a Global Capability Center (GCC) is mandated to abide by the provisions of the Companies Act, 2013 and rules framed under it.
The Ministry of Corporate Affairs, along with the Registrar of Companies, governs matters relating to incorporation process, event-based statutory compliances, alteration in share capital, transfer of shares, composition of board and filing annually. Adhering to these requirements ensures regulatory transparency and smooth ongoing operations of the GCC in India
Most of the areas in which GCC is heavily invested in India permit foreign direct investment up to 100% on automatic route under FEMA regulations.
Certain sectors have foreign direct investment (FDI) restrictions and/or require government approval in advance, which could impact GCC structuring.
GCC investments in India should be reported to RBI as per Foreign Exchange Management Act through a banking channel as under:
All FEMA related submissions will be mandated to go through the RBI’s portal in order to maintain continued compliance.
Establishing a GCC in India: various tax compliances would require to be assessed at the structuring stage and on an ongoing- basis.
According to Income tax Act of 1961, a GCC constituted in India is deemed to be resident entity and subject to corporation tax. The tax rate is a function of the selected tax regime and allowances/concessional rates, if any.
b) Transfer Pricing Regulations:
These are applicable in case of related parties transactions. As per regulations these transactions have to be at ‘arms-length price’ i.e., the transactions shall be done at such price as the same is being done between unrelated parties. For this to work, services must be effectively documented and priced on an arm’s length basis.
c) Withholding Taxes:
As per section 195 of the Income Tax Act, 1961 TDS will be applicable on payment done by GCC to foreign partners based on the nature of transaction.
d) Indirect Taxes:
GCCs established in India will be liable for GST and will need to take GST registration (if applicable). However exemptions are available from payment of GST in case of export of services.
Step 1: First and foremost step is to decide the nature of business activity of proposed GCC.
Step 2: Reservation of Proposed Name of GCC and Application for Registration of GCC
Step 3: Regulatory Approvals and Opening of the Bank Account
Step 4 : Tax and Compliance Registration
Step 5: Infrastructure & Hiring
Step 6 – Policies & Governance
The separate state governments in the country have formulated policies and support systems to promote the investments of foreign companies in their GCCs by offering them state-sponsored incentives that would lead to inflow of FDI into this industry sector in their respective countries.
Examples:
These are the sort of joint regulatory efforts that India is known for: a mix of federal and state-level business-enabling initiatives.
Therefore, a strong legal and compliance department and support of local’s professionals is required in order to operate smoothly and legally.
Establishing a Global Capability Centre in India can give foreign companies an advantage in terms of talent advantage, global delivery excellence, cost advantage, and an attractive and conducive regulatory environment. It is a process that involves proper planning and comprehension of various pieces of legislation in India.
With the presence of a proper legal system and corresponding policies of governance, the GCC environment in the Indian context has the potential to emerge as a home to innovation and operations in the long term for MNCs.
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