What India’s GCC Ecosystem Expects From Union Budget 2026

India’s global capability centre (GCC) ecosystem has now entered a new phase of scale and strategic importance, calling for a focus on systemic transformation over isolated incentives. 

Last year, during the Union Budget 2025, the government shifted its focus towards tier-2 cities, moving beyond traditional GCC hubs like Bengaluru, Hyderabad, Delhi, Chennai, Mumbai, and Pune. Finance minister Nirmala Sitharaman highlighted plans to introduce a national framework for states to promote GCCs, boost talent, develop infrastructure, and pledged support for taxation and legislative ease in tier-2 cities. 

However, the Union Budget 2026 will require a comprehensive vision for how policy must evolve to support offshoring, GCCs, manufacturing, R&D, and services as one integrated economic strategy, not fragmented silos.

Unified Offshoring Strategy

Talking to AIM, Rohan Lobo, partner and GCC industry leader, Deloitte, South Asia, emphasises that policy thinking must begin before the GCC stage, at the offshoring decision itself.

Instead of separate policies for manufacturing, startups, GCCs, outsourcing, and services, he calls for a unified national framework. “We have to look at it in entirety and enable an organisation coming to India as one—therefore create a single window clearance… a consolidated tax break… and a one India market access approach.”

On the same lines, Ritika Loganey Gupta, partner and GCC sector tax leader, EY India, says that while policy intent exists, approvals have to go through multiple central and state authorities, creating delays in setting up and scaling operations.

“A dedicated central body would provide coordination and continuity, helping align central and state policies,” Gupta mentions.

Lobo believes that India’s attractiveness lies not just in cost efficiency, but in its multi-dimensional value proposition, market access, manufacturing potential, export capability, logistics, and talent density. She proposes creating digital economic zones.

“Lessons from STPI, SEZ and manufacturing-led SEZ zones need to converge into something we call a digital economic zone, where research, e-procurement, manufacturing, services, AI, power, and infrastructure come together in one zone,” she adds.

This model would enable balanced growth across tier-1, tier-2 and tier-3 cities, while aligning outsourcing, GCCs, and manufacturing ecosystems.

In its pre-budget memorandum submitted to the Ministry of Finance, Nasscom suggested modernising SEZ reinvestment rules to permit investment in cloud infrastructure, digital tools, and workforce expansion and training. 

This would enable companies to redirect retained earnings into future-ready capabilities. It would also help SEZ-based GCCs evolve from traditional delivery centres into advanced innovation, engineering, and AI-led global hubs.

R&D at Risk, Global Tax Asymmetry

Lobo flags a serious structural risk to India’s R&D inflows due to recent US tax reforms.

“In the US, depreciation for manufacturing structures is 100%, for R&D is 100%, and for software used in R&D is 100%. If the same work is done in India, you have to amortise it over 15 years,” he states.

He warned that this creates a competitiveness gap. India needs to change tax rates so that it becomes neutral for a US company to conduct research and development in India, he proposes.

Without intervention, he cautions, global R&D work may stop flowing into India, particularly from the US.

On taxation, Lobo advocates for simplification. “Many companies would rather pay a higher rate of tax than have confusion on the tax,” he explains.

He also proposes converging transfer pricing into fewer predictable rates and extending APA (Advance Pricing Agreement) durations beyond five years for stability and investor confidence.

Furthermore, Nasscom too believes that reducing TDS on software royalty from 10% to 2% would significantly lower tax friction for cross-border digital and technology services. It would make India a more attractive destination for global technology investments and software-led operations. Aligning TDS rates for Fees for Professional Services (FPS) and Fees for Technical Services (FTS) would remove long-standing classification ambiguities.

“Equally important is continued progress on ease of doing business through fewer licenses, permits, and discretionary approvals for non-sensitive, technology-intensive imports,” Dhaval Radia, chief financial officer, ZEISS India tells AIM.

Tier-2 Growth Needs Infrastructure

While tier-2 and tier-3 expansion is inevitable, Lobo stresses that incentives alone won’t drive adoption.“You cannot do a bandage approach to the sector.”

He highlights the need for urban infrastructure, airports, connectivity, education, healthcare, and ecosystem development to make new cities viable GCC hubs.

Looking ahead, Lobo warns of a structural shift driven by AI. “Work will be eliminated using AI, agentic AI, and machine learning. The worker who eliminates the work can sit anywhere in the world,” he states.

India’s advantage, he argues, must come from owning the disruption, not resisting it. 

On the proposed national GCC policy, Lobo supports unification but emphasises cross-ministerial alignment. He adds that instead of multiple states competing with each other, they should collaborate.