India's Chief Economic Adviser Urges GCCs to Pivot Toward AI Innovation

Chief Economic Adviser V. Anantha Nageswaran stated at the Confederation of Indian Industry (CII) GCC Business Summit in New Delhi that Global Capability Centres (GCCs) are a quiet success of the Indian economy. India currently hosts over 2,100 GCCs, representing approximately half of the world's total, which employ more than 2 million professionals and generate over $60 billion in annual revenue, contributing nearly 2 percent to the national GDP.

Nageswaran argued that artificial intelligence enhances the value of professionals in well-managed centers by shifting roles toward system design, training, and governance. While routine, rule-based tasks are vulnerable to automation, he emphasized that India must be an active author of AI technology. He cited the Merck Group's integrated campus in Bengaluru as a prime example of high-value digital capability concentration.

To support this transition, the Government of India implemented a simplified transfer pricing safe harbour regime in the Union Budget and a framework to expand GCCs into tier-II and tier-III cities. However, Nageswaran cautioned that government policy alone cannot secure leadership; firms and individuals must drive the shift from cost-competitiveness to innovation.

Industry leaders echoed these sentiments. Sanjay Kaul of GIFT City noted a transition toward capability and control arbitrage, while Deloitte's Rohan Lobo estimated GCCs could contribute up to $199 billion in direct gross value added over the next few years. Both highlighted a critical digital skills gap, with Lobo noting a gap of 29-30% that requires urgent collaboration between government, academia, and industry.