Karnataka unveils plan to double Global Capability Centres by 2029 | Mint

Karnataka aims to double the number of Global Capability Centres (GCCs) in the state over the next five years through an ambitious new policy, still in the drafting stage, offering financial incentives, including rent coverage, tax breaks, and reimbursements.

With a current base of about 500 GCCs, the state plans to reach 1,000 by 2029, marking a significant effort to attract international companies seeking to establish captive centres specializing in technology, research, and development. This initiative comes as part of the proposed Karnataka Global Capability Centre (GCC) Policy 2024-2029, the first such policy dedicated to these centres.

“We are the leaders. We didn’t have to do it, but we tend to be on top…We’re the Usain Bolt, and we’ve never looked back,” said Priyank Kharge, Karnataka’s IT minister, while announcing the draft policy for feedback.

Read this | Tech, engineering jobs to be driven by GCCs as IT services remain muted

India has more than 1,700 GCCs, according to IT industry body National Association of Software and Services Companies (Nasscom), of which Karnataka houses a third.

Kharge, now serving his second term as the state’s IT minister, hopes to attract further investments, especially as neighbouring states like Tamil Nadu house major players such as Foxconn and Ola, while Telangana is set to host Google’s second-largest office.

The draft policy targets $50 billion in economic output and aims to create 350,000 jobs through the expansion of GCCs.

Incentives to drive expansion

Under the policy, Karnataka plans to offer at least 26 incentives to new and existing GCCs, aiming to lure investments outside the overcrowded Bengaluru region. 

Key incentives include funding up to 40% of the total capital expenditure, capped at ₹5 crore, for GCCs setting up in towns and cities outside Bengaluru. The policy will support a maximum of five such projects during its tenure.

Also, GCCs with over 100 employees located outside Bengaluru can claim up to 50% rent reimbursement, capped at ₹50 lakh, with the policy supporting up to 10 such projects annually.

The state will offer additional incentives through tax exemptions and reimbursements to reduce operational costs. New GCCs setting up or expanding operations in Karnataka will receive a 100% exemption from electricity tax for five years. For centres outside Bengaluru, the government will reimburse one-third of property tax for the first three years of operations.

The draft policy also focuses on boosting employment, offering a 50% reimbursement on intern stipends for a maximum of three months, capped at ₹5,000 per intern per month. This benefit will cover up to 20,000 interns annually and 1,00,000 interns over the policy period. The reimbursement applies to GCCs hiring interns from state government universities or affiliated colleges.

Beyond Bengaluru

The state government’s focus extends beyond Bengaluru, often referred to as the Silicon Valley of India. The policy encourages companies to establish or expand GCCs in various towns across Karnataka, each known for its specialized expertise.

“So the idea…is not to create more Bengalurus around Karnataka, but to give each region, to give each centre, to give each tier-2 city its own unique field,” said Sharath Bachegowda, member of the state assembly and chairman of Keonics, which is the the state government’s largest IT training institute.

And this | Gift City may witness a jobs boom. Hint: GCCs.

Karnataka is actively promoting investments in smaller cities such as Mysuru, Mangaluru, Hubballi-Dharwad, and Kalaburagi to diversify its economic landscape.

This push to expand GCCs beyond Bengaluru also comes as the city grapples with infrastructure issues, with commutes of up to two hours. Rising real estate prices have added to the challenges, prompting the state government to invite companies to set up in other parts of Karnataka, where rental costs are lower, and skilled talent is abundant.

While the policy primarily focuses on larger GCCs with over 100 employees, it also provides a “range of benefits” for smaller ‘nano GCCs’—those employing between five and 50 people—though specific incentives for these smaller centres are yet to be detailed.

In competition

Karnataka’s bid to double the number of GCCs follows chief minister Siddaramaiah’s ambitious vision for the state to become a $1 trillion economy by 2032.

“When we talk about a $1 trillion digital economy…we need to ensure we stay ahead of the curve,” Kharge said.

While Kharge is focused on drawing new GCCs to Karnataka, neighboring states are also ramping up their efforts. Tamil Nadu is incentivizing high-paying jobs—those offering more than ₹1 lakh per month—by providing payroll subsidies to GCCs. Meanwhile, Telangana has unveiled plans for a life sciences GCC consortium in Hyderabad, bringing together all GCCs specializing in that sector.

Also read | Karnataka’s migrant base is the most educated, youngest in India

According to Nasscom, India’s GCC market is expected to grow to $105 billion, with the number of centres projected to reach 2,200 by 2030.