What Impact Do GCCs Have on Economic Growth?

Visakhapatnam, Sep 17 (NationPress) Global Capability Centres (GCCs) are pivotal in driving economic growth, enhancing competitiveness, and fostering human capital development, according to Union Finance Minister Nirmala Sitharaman during her address on Wednesday. She described India's GCC evolution as a transformative journey.

Speaking at the GCC Summit hosted by the Confederation of Indian Industry (CII), Sitharaman emphasized that GCCs serve as innovation hubs, spearheading R&D, generating intellectual property and patents, and facilitating sustainable growth for global businesses. By offering long-term competitive advantages to international organizations, GCCs are solidifying India’s status as the world’s GCC epicenter.

The Finance Minister noted that ahead of the Union Budget slated for July 2024, she learned that 50% of the world's GCCs are projected to be located in India, while the remaining ones are predominantly managed by Indians abroad. "After nearly two years, GCCs have developed a distinctly Indian character, progressing with the same pace and expectations," she remarked.

She acknowledged the crucial role of state governments in enhancing India’s GCC advantages and creating a supportive policy environment. To maximize impact, she urged for the alignment of national and state-level policies and the adaptation of policy instruments to enable each state to leverage its unique comparative advantages.

Furthermore, Sitharaman proposed the development of livability and infrastructure ecosystems that would allow Tier-2 and Tier-3 cities to become centers of excellence capable of attracting global talent, fostering corporate reinvestment, and hosting high-value innovation and service delivery, providing viable alternatives to Tier-1 metros.

"The Central government is dedicated to working alongside states in this initiative, enhancing capacity and addressing ecosystem requirements," she stated, highlighting that the 2025 Budget includes a national framework aimed at promoting GCCs in emerging Tier-II cities.

She indicated that the introduction of the Model State GCC Framework offers a clear pathway for states to intensify their efforts, attract investments, and cultivate resilient ecosystems. "Through collaboration – between the Centre, states, industry bodies like CII, and global companies – we can ensure that India’s GCC expansion is both comprehensive and prepared for the future. This will not only strengthen India’s leadership in the GCC domain but also create new opportunities for innovation, job creation, and inclusive regional development, ultimately contributing to the vision of Viksit Bharat by 2047," she asserted.

Sitharaman elaborated that significant strides have been made to alleviate infrastructure and logistics challenges. She pointed out that capital investment has surged from 1.7% of GDP in FY2013-14 to 3.2% in FY2024-25, with effective capital expenditure reaching 4.1% of GDP.

"In the last 11 years, 88 airports have been operationalized, 31,000 km of new rail tracks have been laid, metro networks have expanded fourfold, port capacity has doubled, and the National Highway network has grown by 60%. Complementing these efforts, the Centre, through the Scheme for Special Assistance to States for Capital Investment (SASCI), has sanctioned over Rs 3.6 lakh crore as 50-year interest-free loans to states, incentivizing increased capital expenditure, resulting in 22 states achieving over 10% growth in capital expenditure from their own resources," she concluded.