Madhya Pradesh Bets on Global Capability Centres to Rewire Its Economy
20 FEB 2025 / 04 min read
Madhya Pradesh launches India's first GCC policy to attract multinational corporations, decentralize economic growth, and establish Tier-2 cities as global innovation hubs.
In a move that signals India's growing ambition in the global services sector, Madhya Pradesh has become the first state in the country to unveil a dedicated policy for Global Capability Centres (GCCs). The initiative is designed to position the central Indian state as a hub for multinational corporations (MNCs) looking to set up offshore centres for high-value research, product development, and digital transformation.
Historically, India’s IT sector has been driven by outsourcing giants headquartered in Bengaluru, Hyderabad, and Pune. GCCs, on the other hand, represent a newer breed of corporate investment, where global firms establish in-house technology and innovation centres rather than relying on third-party vendors. These centres handle critical business functions ranging from AI-driven analytics to financial services and cybersecurity, often influencing strategic decisions at headquarters.
Madhya Pradesh's decision to enter this space is not accidental. The state’s economic planners recognise that while India dominates the GCC market—accounting for over 50% of global GCCs—the industry remains concentrated in a few metropolitan hubs. By attracting investment into Tier-2 cities such as Indore and Bhopal, policymakers hope to decentralise economic growth, reduce congestion in established IT cities, and create new urban knowledge economies.
The policy is generous with incentives. Companies setting up GCCs in the state will be eligible for a capital expenditure subsidy of up to 40%, with a cap of ₹30 crore ($3.6 million). Additional benefits include rent assistance, payroll subsidies, and financial support for R&D and patent filings. The government also aims to make the investment process frictionless, with a "No Query Portal" that promises a streamlined, single-window clearance system—an important step in a country where regulatory red tape is often cited as an investment deterrent.
Beyond incentives, Madhya Pradesh is making a play for long-term viability by investing in talent and infrastructure. The state boasts five Special Economic Zones (SEZs) and 15 IT parks, along with a network of over 300 engineering colleges producing more than 50,000 graduates annually. However, the real challenge will be convincing top-tier talent, which currently gravitates towards cities like Bengaluru and Gurugram, to relocate to emerging hubs in central India.
India’s GCC sector has been on a steep growth trajectory, with over 1,950 centres currently operating in the country. These centres employ approximately 1.9 million professionals and contribute an estimated $60 billion to the economy. The national government has recognised the strategic importance of the sector, setting a target of growing India's GCC market to $110 billion by 2030. Madhya Pradesh’s policy fits neatly within this broader ambition.
However, the state faces stiff competition. Karnataka recently announced a GCC policy aiming to double the number of centres operating in Bengaluru by 2029. Gujarat, meanwhile, is promoting its GIFT City as an alternative for financial services GCCs, offering tax breaks and regulatory advantages.
The success of Madhya Pradesh’s GCC policy will hinge on execution. While its incentives are competitive, states like Telangana and Maharashtra already offer similar benefits. The real differentiator will be how quickly and effectively the state can operationalise its promises.
If Madhya Pradesh succeeds, it could offer a template for other states looking to enter the high-value end of the global services market. If it falters, the policy will be yet another reminder that India’s IT industry, for all its scale, remains stubbornly tied to a few dominant cities.
For now, Madhya Pradesh is making a bold bet that it can reshape India's economic geography. Whether global corporations follow its lead remains to be seen.
