New Delhi: India is emerging as a prime location for Global Capability Centres (GCCs), as highlighted in the Economic Survey 2024 released on Monday. The government's efforts have been crucial in attracting international businesses to set up GCC operations in the country.

India has climbed the ranks to become the seventh-largest services exporter, a significant rise from its 24th position in 2001, according to the Economic Survey presented by Finance Minister Nirmala Sitharaman in Parliament.

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The survey praises India's progress in this sector, crediting initiatives such as Digital India, streamlined tax regulations, and flexible labor laws for making it easier for multinational companies to establish operations. These efforts have facilitated the setup of over 1,600 GCCs, which now contribute more than 1% to India's GDP.

India's journey in this domain began with Texas Instruments in 1985. Since then, it has attracted companies from various sectors, including banking, software, and healthcare. Recently, there has been a trend of GCCs moving to tier-II cities, driven by cost advantages and improved infrastructure, further enhancing India's appeal as a GCC hub.

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India also ranks highly in several export categories: second in telecommunications, computer, and information services; sixth in personal, cultural, and recreational services; eighth in other business services; tenth in transport services; and fourteenth in travel services.

The survey notes that India's services exports, in US dollar terms, have grown at a compound annual growth rate (CAGR) of over 14% from 1993 to 2022, significantly outpacing the growth of India's merchandise exports (10.7%) and global services exports (6.8%). Consequently, India's share of global services exports has increased from 0.5% in 1993 to 4.3% in 2022.

Global Capability Centres (GCCs) in India offer tailored services in operations, product development, and innovation. They cover a wide range of service lines, including IT, BPO, engineering, and software product development, handling complex tasks that require deep business understanding.

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"They have made significant contributions to key sectors such as banking and financial services, software, telecom, and semiconductors. There is also a growing presence in aerospace, automotive, oil and gas, healthcare, and pharmaceuticals," the Economic Survey 2024 stated.

The Survey credited government support for the growth of GCCs, highlighting strategic initiatives like Digital India, which has simplified online approvals and licensing processes.

"Efforts such as streamlined tax regulations, compliance procedures for foreign companies, flexible labor laws, and single-window clearance systems for faster approvals have made the business environment more conducive," the Survey noted.

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The report also emphasized that enhanced digital infrastructure, including high-speed internet and data centers, has greatly benefited GCC operations. Additionally, states like Karnataka, Telangana, and Tamil Nadu have played a proactive role in expanding the GCC landscape.

The Survey observed that GCCs are increasingly looking at tier-II towns for expansion. This shift is influenced by the reverse migration seen during the pandemic and the cost advantages offered by these less-penetrated markets.