How to set up a global capability centre in India
A practical guide for leaders planning their first centre in India: the operating model, the right state, the legal entity, tax and the first hires, in seven steps.
India is no longer only a place to move back office work. Global companies now run engineering, AI, research, finance and product teams from their Indian centres, and state governments are competing hard to host the next one. That competition is good news for anyone planning a centre, but it also means more choices to get right.
This playbook walks through the decisions in the order most companies face them. It draws on the GCC policies states have published, the rules that apply to foreign owned companies, and the centres we have tracked opening across India this year.
Seven steps to a working centre
Decide what the centre will do
Start with the work, not the office. A centre built for engineering and AI needs different talent, cities and leaders from one built for finance or operations. Write down the first three functions it will own, the headcount for the first two years, and how it will report to headquarters. Every later choice follows from this.
Pick an operating model
Most companies choose one of three routes. A captive centre is your own company from day one. Build operate transfer (BOT) lets a partner set up and run the centre, then hand it to you at an agreed point. A managed or hybrid model keeps a partner involved for longer. The table below compares them.
Choose the state and city
This is where the money is. States now compete with dedicated GCC policies that pay towards salaries, rent and capital costs, and several pay more for centres outside the main metro. Compare the talent pool first, then the incentive. Our state table below and the full state profiles show what each one offers.
Set up the legal entity
Almost every GCC is a wholly owned subsidiary, incorporated as a private limited company under the Companies Act, 2013. IT, software and most business services take 100% foreign ownership under the automatic route, so no prior government approval is needed. Incorporation is filed online with the Ministry of Corporate Affairs through the SPICe+ form. You need at least two directors, one of them resident in India.
Register for tax and labour
After incorporation the company needs its PAN and TAN, GST registration, registration under the state’s shops and establishments law, and provident fund and employee state insurance registrations as headcount reaches the legal thresholds. The share capital received from the parent must be reported to the Reserve Bank of India on form FC-GPR within 30 days of allotting shares.
Price the work with headquarters
A GCC usually bills its parent for its costs plus a margin, and that margin is checked under transfer pricing rules. India simplified this from 1 April 2026: IT, ITeS and related services now fall into one category with a safe harbour margin of 15.5% on operating costs, for companies with eligible transactions of up to ₹2,000 crore. Opting in gives tax certainty without a long negotiation.
Hire leaders first, then teams
The first hires decide the culture. Appoint the centre head and the leads for each function before scaling, and agree early how decisions and budgets will flow between India and headquarters. Centres that are given real ownership of products and outcomes grow faster than those set up only to cut costs.
Captive, BOT or managed: how the models compare
| Model | How it works | Main strength | Main trade off | Best for |
|---|---|---|---|---|
| Captive | You own the company from day one | Full control of people, IP and culture | Slowest start and highest upfront effort | Large companies with a long term India plan |
| Build operate transfer | A partner builds and runs it, then hands it over | Fast start with a clear path to ownership | Transfer terms must be agreed in detail upfront | First time entrants that want ownership later |
| Managed or hybrid | A partner stays involved for longer | Quickest to launch and flexible to scale | Less direct control and shared management | Testing India before a full commitment |
Timelines depend on headcount, city and how quickly headquarters signs off. A partner led model usually gets the first people working sooner, while a full captive build takes longer but gives complete control from the start.
What the leading states offer
Incentives now differ sharply from state to state, and many pay more for centres in smaller cities. Here is a snapshot of the headline offers. Each state name opens its full profile.
| State | Policy | GCC target | Headline incentive |
|---|---|---|---|
| Karnataka | GCC Policy 2024 to 2029 | 500 new by 2029 | Up to 75% of innovation lab capex outside Bengaluru |
| Maharashtra | GCC Policy 2025 | 400 new by 2030 | 40% to 50% of salary above ₹1 lakh for 3 years |
| Telangana | New policy in drafting | 100 more in 2026 | Targeted support for AI, space and chips |
| Tamil Nadu | Payroll incentive scheme | Hubs in 4 new cities | 30%, 20% and 10% payroll subsidy on high pay jobs |
| Uttar Pradesh | GCC Policy 2024 | 500 by 2031 | 25% capital subsidy and full stamp duty exemption |
| Gujarat | GCC Policy 2025 to 2030 | 250+ new | Capex support up to ₹200 crore and opex up to ₹40 crore |
| Haryana | GCC Policy 2026 | 100+ new | Capex and opex support by location tier |
| Kerala | GCC policy and Boilerplate | 150 by 2031 | Single coordinated setup package |
Incentives depend on each state’s eligibility rules, application windows and approval. See all 12 state profiles.
The national picture is moving in the same direction. In the Union Budget 2025, the central government announced a national framework to guide states in promoting GCCs in emerging tier 2 cities, adding weight to the push beyond Bengaluru, Hyderabad, Pune and Chennai.
Your setup checklist
- First functions, headcount and reporting line agreed
- Operating model chosen and partner terms signed
- State and city shortlisted on talent and incentives
- Incentive applications filed with the state
- Subsidiary incorporated through SPICe+
- PAN, TAN and GST in place
- Shops and establishments, PF and ESI registered
- FC-GPR filed within 30 days of share allotment
- Transfer pricing approach set, safe harbour reviewed
- Centre head and function leads hired
The Narrative Republic view
The companies getting the most from India are treating their centres as owners of real work, not as cost savers. They pick the state for its talent first and the incentive second, they bring leadership in early, and they give the India team products and outcomes to own. States have made the entry cheaper than ever. What decides success now is how much responsibility headquarters is willing to hand over.
This guide is for general information and is not legal, tax or investment advice. Rules and incentives change, so confirm the details with your advisers before acting. Last updated November 2026.
