India’s 2025 budget boosts IT sector, GCCs beyond major cities
NEW DELHI, INDIA — India’s Union Budget 2025, with a total expenditure of ₹50.65 trillion (US$581.6 billion), has introduced a groundbreaking initiative to expand global capability centers (GCCs) into Tier-II cities, aiming to decentralize growth and strengthen the country’s IT sector.
Finance Minister Nirmala Sitharaman announced a national framework to guide states in promoting GCCs, focusing on talent development, infrastructure improvement, and industry collaboration. Cities like Jaipur, Vadodara, Coimbatore, and Kochi are poised to emerge as new tech hubs under this initiative.
Industry leaders have welcomed the move, with ANSR CEO Lalit Ahuja stating, “With 80% of global firms yet to establish GCCs in India, this initiative unlocks tremendous potential for transforming India’s attractiveness as the global GCC capital, while creating millions of skilled jobs across the country’s emerging urban centers.”
The Economic Survey 2024-25 revealed that GCCs in India have grown from 1,430 in FY19 to over 1,700 in FY24, employing nearly 1.9 million professionals.
Tax reforms simplify compliance for businesses
The Union Budget also addressed key taxation challenges by introducing reforms in transfer pricing and safe harbor rules. Sitharaman proposed a three-year block assessment scheme for international transactions to streamline processes and reduce litigation.
“This will be in line with global best practices,” she noted during her presentation.
Industry body Nasscom praised these measures, emphasizing that expanding the eligibility threshold for safe harbor rules would enhance competitiveness for GCCs.
Himanshu Sinha, Head of Tax Practice at Trilegal, added that these changes would improve foreign investor sentiment and facilitate mergers and acquisitions. The reduction of customs tariffs from 15% to 8% was also highlighted as a step toward boosting investor activity.
Driving innovation with AI and IIT expansion
The Budget’s focus on innovation extends to proposals for expanding IITs and establishing a dedicated artificial intelligence (AI) center.
Rishi Das, CEO of IndiQube, called this a “forward-looking approach” that will further cement India’s position as a global hub for innovation and entrepreneurship.
A step toward economic transformation
With its emphasis on decentralizing GCC growth, streamlining tax compliance, and fostering technological innovation, the Union Budget aligns closely with India’s vision of becoming a $5 trillion economy.
These initiatives are expected to drive high-value job creation and digital transformation across emerging urban centers while enhancing the country’s global competitiveness.
