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Selecting India as your destination to set up Global Capability Center has become the ideal choice. India has been a prominent hub for GCCs with around 1700+ active GCCs. This is because of a number of benefits; the country has to offer. But it is important to plan carefully before starting the set-up process.
Whether you are setting up an accounting GCC, IT services GCC or Research & Development GCC, because of the complex regulatory structure of India, it can be a tough journey to evaluate your business and plan for the set up. This guide takes us through the step-by-step process for GCC setup in India by a foreign company, to make you equipped to navigate better through the journey.
Global Capability Center (GCC) is an offshore unit set up by large multinational corporations to deliver various services for their parent organisations. They function as an integral part of the global corporate structure, providing specialised expertise in areas like research and development GCC, information technology GCC. GCCs play an important role in achieving cost efficiency, tapping into skilled talent and a collaboration between the parent firm and their international affiliates.
Global companies set up GCCs to take sourcing services from other entities and commence activities related to Information technology and digital services, Research and Development (R&D), Human Resource, Finance and Engineering and design workflow operations.
India is a hub for GCCs, but why do global businesses choose India to set up a GCC. Here are some common reasons:
Setting up a GCC includes several important steps. Here are the steps:
Starting with the most important step. Figure out what is the main purpose of the GCC within the organisation. Earlier GCCs were set up to save cost and help with operation but nowadays they are more like innovation hubs that help make global product development and digital transformation possible.
A very important thing is the organisations should be clear on what will be the functioning areas of the GCC. They can be research and development in technology, data analytics, financial operations, managing the customer experience, and shared business services.
Choosing the right location is one of the most important strategic decisions for the long-term success of your GCC. India has many capability center hubs, each comes with its own benefits when it comes to infrastructure, availability of talent, and industry specialization. For example: Bengaluru is home to many software engineers and tech companies, Hyderabad has grown into a center for IT and life sciences.
To choose the right city you need to evaluate the requirements and goals of your business and then go for the location that aligns the most with your business.
Legal structure directly affects the functioning of your business. The most common model chosen by most GCCs is the Wholly Owned Subsidiary (WOS) in India. It provides full operational control and allows companies to manage hiring, governance, and internal operations directly.
In some cases, other types of structures like a Branch Office or Project Office or LLP, but generally they have limits on the functioning.
| Feature | Wholly Owned Subsidiary (WOS) | Branch Office (BO) | Limited Liability Partnership (LLP) |
|---|---|---|---|
| Ownership | 100% ownership of the parent company. | Extension of parent company; not a separate entity. | Multiple partners share the ownership; can be both foreign and local entities. |
| Control | Full operational and strategic control. | Parent company has full control, but it must operate under RBI rules. | Shared control among partners. |
| Liability | Limited to invested capital. | Liability extends to the parent company. | Limited to partner contributions. |
| Best suited for | Most GCCs; ideal for strategic operations and IP protection. | Temporary projects and operations; not suited for full-scale GCCs. | Joint ventures; rare for large GCCs. |
Before you start operating, there are a few compliance boxes you’ll need to tick and it’s worth getting ready for them from the very start rather than chasing them later.
Start with registering your entity with the Ministry of Corporate Affairs (MCA), apply for a PAN and TAN, and open a business bank account. If your projected annual turnover crosses ₹20 lakhs (or ₹10 lakhs in special category states), GST registration becomes mandatory too.
For foreign-owned businesses specifically, two additional layers apply. First, confirm your sector falls within India’s FDI policy framework, permitted sectors, applicable ownership caps, and whether your entry route is automatic or requires prior government approval. Second, go through your FEMA compliance checklist before you finalise registration. Getting this sequencing right saves a lot of back-and-forth with the RBI later. FEMA compliance checklist.
Hire your Indian head or CEO, the single biggest factor for the success of your GCC. A good leadership helps set the culture, attract top-tier talent, local nuances, and manage the relationship with the parent company.
With your registration and leadership in place, planning for infrastructure is another important part of the GCC set up. Companies must set up safe IT environments, collaboration platforms and enterprise systems that work well with company operations.
Set up your physical (or hybrid) workspace. Once the infrastructure is ready it’s time to go live.
Many businesses overlook certain areas while setting up a GCC in India. Which further can result in drawbacks for the business. Avoiding them in the beginning ensures the smooth operation of the businesses. Here are some of the common mistakes to avoid:
There’s no doubt that choosing India to set up GCC, can be a strategic move that may yield a high value to your business. A GCC setup in India by a foreign company helps on cost saving, improved operational efficiency, and development and innovation to sustain the business in the long run. India’s complex regulatory structure including FEMA makes it important to keep a strict check on compliance and regulatory requirements. Neglecting compliances can lead to heavy penalties and even disruption in business operations.
However, a successful GCC depends on taking informed decisions at every stage of the business. This is where an expert guidance can make your way easy.
