Smaller cities to power India’s GCC growth: FM

Smaller Cities to Power India’s GCC Growth: FM

Smaller cities to power India s GCC – India’s Finance Minister, Nirmala Sitharaman, has unveiled a vision that positions smaller cities as central to the nation’s expansion of its Global Capability Centres (GCCs). In her recent address, she underscored how these cities are not only emerging as hubs for economic activity but are also playing a pivotal role in reshaping India’s global competitiveness in the tech and services sectors. The focus keyword, “Smaller cities to power India,” is a core theme in this strategic shift, as the government seeks to harness their untapped potential to drive sustainable growth.

Scaling GCCs with a Focus on Regional Development

According to Sitharaman, the target is to create an environment that can support around 5,000 GCCs by 2030, doubling the current count of over 2,100 centers. These facilities are essential for handling complex tasks such as AI development, cybersecurity, and digital transformation. With over 500 Fortune Global 2000 firms already operating GCCs in India, the minister emphasized the need for a more distributed model to ensure balanced regional development. Smaller cities to power India’s growth, she argued, would not only reduce the burden on major urban centers but also stimulate local economies.

“The ambition of building an ecosystem capable of supporting around 5,000 GCCs by 2030 is therefore both realistic and achievable. And this is a milestone on a much larger journey,” she said.

Repositioning the Value Proposition of GCCs

India’s appeal to global firms has shifted from cost efficiency to a broader value proposition rooted in capability leadership. While cost advantages remain significant, the focus is now on innovation and strategic alignment. GCCs are increasingly tasked with leading research initiatives, developing intellectual property, and driving digital transformation for clients worldwide. This evolution means that smaller cities to power India’s GCC growth are not just about lower labor costs but also about fostering ecosystems that support cutting-edge technologies and global partnerships.

“India’s value proposition has evolved from cost efficiency to capability leadership,” she said.

The finance minister pointed out that nearly two-thirds of Fortune Global 2000 companies have not yet established GCCs in India, highlighting a vast opportunity for further expansion. By leveraging the strategic advantages of smaller cities to power India’s GCC growth, the government aims to attract firms from regions like East and West Asia, Eastern Europe, and Australasia. These locations offer a combination of skilled talent, infrastructure, and favorable policies that align with the demands of modern global enterprises.

Key Drivers for GCC Expansion in Smaller Cities

The next phase of GCC growth will see a significant push toward Tier-II and Tier-III cities, where operational costs remain competitive and innovation ecosystems are rapidly maturing. Cities such as Varanasi, Chandigarh, Visakhapatnam, Tiruchirappalli, and Mysuru are being identified as key players in this transition. Sitharaman highlighted that the establishment of GCCs in these cities creates a ripple effect, generating employment, boosting infrastructure development, and fostering collaboration between academia and industry.

“When a GCC establishes itself in one of these cities, there is a multiplier impact,” she said.

Moreover, the government’s Union Budget 2026-27 includes several measures to strengthen the GCC ecosystem. These include a Unified Safe Harbour Regime, which simplifies compliance for IT services, and an increased Safe Harbour threshold to ₹2,000 crore. The introduction of a fast-track APA mechanism also aims to reduce tax complexities, while investments in digital public infrastructure and multimodal logistics will further enhance the appeal of smaller cities to power India’s GCC expansion.

Building a Sustainable Future for Smaller Cities

Smaller cities to power India’s GCC growth require more than just favorable policies; they need a holistic approach to development. Sitharaman stressed the importance of partnerships with universities, startups, and state governments to create a robust innovation pipeline. By supporting the creation of five University Townships and City Economic Regions (CERs), the government is laying the groundwork for these cities to become globally competitive knowledge hubs.

These initiatives are designed to reduce compliance burdens and provide policy certainty, encouraging long-term investments. The minister also called for a deeper integration of local talent into the global value chain, ensuring that smaller cities to power India’s GCC growth are not just outposts but integral to the nation’s economic strategy. As the demand for advanced skills in sectors like AI and digital transformation grows, these cities are poised to become key players in the future of India’s tech-driven economy.