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The Centre has urged Global Capability Centres (GCCs) to strengthen investments in skilling, capability development and innovation as artificial intelligence (AI) reshapes business models and workplace requirements. Speaking at the CII GCC Summit in New Delhi in the past week, Chief Economic Adviser (CEA) V. Anantha Nageswaran said the government has introduced policy measures to support the sector, including a simplified transfer pricing safe harbour regime and a framework to encourage GCC expansion into tier-II and tier-III cities. He cautioned that AI is likely to replace routine, repetitive and rule-based tasks, making it essential for businesses to move beyond low-cost execution towards higher-value capabilities. He added that India's long-term competitiveness would depend on continuous innovation, skilled talent and stronger government-industry collaboration.
The Centre has called on Global Capability Centres (GCCs) to accelerate investments in skilling, capability development and innovation as artificial intelligence (AI) transforms global business operations. Addressing the CII GCC Summit in New Delhi in the past week, Chief Economic Adviser (CEA) V. Anantha Nageswaran said the government has introduced policy measures to support the growth of GCCs but emphasised that the responsibility for maintaining India's competitiveness rests equally with industry.
Nageswaran said AI has exposed limitations in traditional operating models built around routine, repetitive and rule-based work. He observed that such tasks are likely to be increasingly automated, making it unrealistic for businesses to ignore the risks posed by AI to business models based solely on low-cost execution.
Highlighting recent policy initiatives, the CEA said the Union Budget addressed a long-standing demand of the GCC industry by simplifying and expanding the transfer pricing safe harbour regime. According to him, the revised framework provides a uniform profit margin, significantly higher thresholds and faster, more predictable approvals over a multi-year period, thereby improving tax certainty for GCCs operating in India.
He also referred to the government's national framework aimed at encouraging the expansion of GCCs beyond the country's six major metropolitan centres into tier-II and tier-III cities. Nageswaran said the initiative was intended not only to promote economic growth but also to ensure that employment and investment opportunities are distributed more evenly across the country.
While outlining the government's role, the CEA remarked that policy support alone would not be sufficient to secure India's leadership in the GCC sector. He said the transition from cost-based competitiveness to innovation-led growth would have to be driven by companies and their workforce.
Nageswaran identified skilling as one of the country's most significant challenges, noting that although India produces a large number of graduates annually, relatively few enter the workforce with skills that are immediately aligned with industry requirements. He urged businesses to invest in capability development, stating that India's long-term advantage would depend on its ability to build expertise rather than rely solely on cost competitiveness.
On the impact of AI, the CEA said the technology does not operate independently and requires people to design, train, test, monitor and govern AI systems while making decisions on their appropriate use. He observed that a growing share of these responsibilities is already being undertaken in India, adding that AI has the potential to enhance the value of employees in well-managed GCCs rather than diminish their role.
Nageswaran cautioned against complacency, stating that although India has built a strong position in the GCC sector over time, that advantage could erode as competing countries strengthen their capabilities, operating costs increase and skilled talent becomes more difficult to secure.
Source - PTI
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