India has evolved as the world's biggest hub for data centres and Global Capability Centres, driven by a highly skilled talent pool and rapid digital adoption.
As businesses become more reliant on digital infrastructure and advanced capabilities, data centers and GCCs in India play a key role in building and supporting global operations, innovation, and economic growth.
With the strategic policy support and development of infrastructure, this sector will help India be further ahead of other countries in the global economy.
GCCs employ 1.6 million professionals and earn US$ 64.6 billion in revenue. This sector is expected to be a growth engine, where revenue is projected to reach US$ 100 billion and provide employment to 2.8 million people by the end of the decade and add around 2% to India's GDP.
As the GCCs fuel continuous economic growth, incentives and policy initiatives serve as the wind in the back of this sector. While it is encouraging to see states such as Karnataka introducing GCC-specific incentive policies, the policies at the national level are imperative to introduce a streamlined regulatory and fiscal framework. This is crucial in a highly competitive global landscape, where countries such as Poland, Philippines, Vietnam etc., have been making significant inroads to draw GCC investments to their shores.
In addition, India's rapid shift digitally has significantly increased data consumption rates, pushing the growth of its data centre ecosystem. This shift is further supported by the Digital Personal Data Protection Act, 2023, which emphasizes the need for secure and efficient data infrastructure. While some states have introduced policies to encourage data centre development, the sector requires a unified national framework to address critical factors like scalability, security, and operational efficiency, ensuring India stays competitive in the global economy.
To further spur the growth of this sector, the government could also provide fiscal incentives in the form of tax holidays, concessional tax rates and investment allowances on data centers. Along with these incentives, given the huge upfront capital, necessary to commission a data centre, the government could consider capital subsidies of up to 30% of the total eligible costs.
India is poised as one of the largest global hubs for data centers and G Cs, generating strong potential to accelerate economic growth, innovation, and digital transformation. India stands to further strengthen its leadership in the global economy with continued strategic policy support and infrastructure development.
Targeted fiscal incentives, streamlined regulatory processes, and coordination among state and national policies can help unleash the full potential of these sectors. And as the digital landscape continues to evolve, it would be time and a decisive moment to keep India as an upwardly competitive and preferred destination for investments in technology, data centers, and capability centers.
The government very well perceives the importance of GCC and data centers in our economy. It will be interesting to see how it is going to align with the expectations of these sunrise sectors in the coming budget.
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