We have exogenous and endogenous variables in economics. The recent West Asia conflict is an example of the former. Prior to the conflict, India’s economy was in a Goldilocks situation — estimated GDP growth of 7.6 per cent in FY25 paired with a benign inflation rate of around 2 per cent.

The conflict has dramatically altered the outlook. Our heavy dependence oil, LNG, and LPG imports will impact growth, inflation, the balance of payments, and government finances. With global crude oil prices at elevated levels of $85-90/barrel in FY26, growth may slip to 6.7 per cent (against the projected 7 per cent).

There will be a second-order effects on inflation due to higher raw material costs across several industries. Meanwhile, concerns over AI are weighing on the competitiveness of our IT and services sector. In the past decade, surpluses from services exports were sufficient to offset the deficit incurred from energy imports. But that buffer may erode.

One element that will act as a strategic bulwark against fiscal fragility is the emergence of Global Capability Centres (GCCs). The 1,700 or so GCCs employ 1.9 million professionals and generated $64 billion in export revenue in FY24. GCCs have evolved from back-office operations into innovation powerhouses driving R&D, AI, and fintech for multinational giants across several industries including banking and financial services, technology, and pharmaceuticals. GCCs’ dollar-denominated revenues provide a steady forex inflow, insulating the rupee from volatility.

Unlike remittances or trade exposed to tariffs, GCCs ensure recession-resistant growth, with revenue projections hitting $110 billion by 2030. By localising high-value jobs, they can reposition India as an economic and geopolitical safe haven.

Policy measures

There are several endogenous measures that policymakers should undertake to position India as a premier GCC destination, both at Central and State levels.

Pillar one — building the talent pipeline: entry-level graduates are plentiful, but job-ready graduates are scarce. The gap between university curriculum and industry expectations remains wide, particularly in areas such as artificial intelligence, cloud architecture, and advanced analytics.

Most GCCs in India have historically functioned as execution arms, but global mandates are shifting. Boards now want their India centres to lead product development, drive innovation, and own profit and loss responsibility.

That demands a new crop of mid- and top-level leaders — those who understand a company’s strategic context, navigate cross-cultural complexity, and can advocate for India as a centre in global conversations.

Hyderabad offers an instructive lesson. Concerted investment by companies like Microsoft, Google, and Amazon, combined with deep university partnerships has produced a talent layer capable of stepping into such roles. The government has created an enabling platform through significant funding and support to develop institutes of global repute (e.g., ISB, IIT). The model is replicable, but it requires the government, universities and companies to re-imagine partnerships.

Pillar two — plugging into and nurturing local innovation: GCCs no longer import solutions from headquarters; they generate intellectual property in India.

This shift is possible when GCCs genuinely develop the local innovation ecosystem, not just reside within it. Bengaluru’s experience is instructive. The density of startups, deep-tech firms, and national research institutes allows GCCs to tap into a laboratory of ideas. Several GCC leaders in India describe structured programmes through which they co-develop prototypes with local startups, licence early-stage technologies, and absorb entrepreneurial talent that would otherwise leave for Silicon Valley.

Government and industry associations must create formal connective tissue between GCCs and the startup ecosystem: grants and joint IP frameworks, that allow co-innovation without the friction of bureaucratic uncertainty. A GCC that merely recruits from the ecosystem will extract value; one that invests in it will multiply value.

Pillar three — physical infrastructure as a strategic imperative: Reliable power and data connectivity, accessible housing for a young workforce, and seamless last-mile connectivity are the baseline expectations of GCCs’ location decisions today.

Not all cities and towns in India are attracting GCCs. The top six cities — Bengaluru, Hyderabad, Delhi NCR, Mumbai, Pune, and Chennai — together account for around 90 per cent of total GCCs.

Hyderabad’s HITEC City offers a compelling case study in what purposeful infrastructure planning can achieve. Combining uninterrupted power supply, fibre-dense connectivity, and flyover access, gives the city a quality-of-life credibility that has attracted many Fortune 500 GCCs.

Pillar four — smart policy, competitive taxation, and regulatory clarity: The fourth pillar is where government has the most direct lever to pull. GCC leaders are not seeking tax giveaways; they seek predictability. A competitive tax regime matters, but what matters more is the confidence that policy will not change arbitrarily, interpretations of transfer pricing and GST provisions is consistent, and that disputes will be resolved through transparent mechanisms, not litigation. The recent thrust by Telangana and Karnataka to publish dedicated GCC policies with single-window clearances is a step in the right direction.

Policymakers can address bottlenecks via faster STPI and SEZ approvals, simplified compliance for GCCs engaging contract research, and a coherent national framework that prevents a race to the bottom between States.

The writers are Professors, and co-founders of the Center for Economic Policy at Mahindra University

Published on May 11, 2026