India–UK Free Trade Agreement (FTA) and Global Capability Centres (GCCs)

The India–UK Free Trade Agreement (FTA) aims to boost bilateral trade by reducing tariffs, enhancing market access, and strengthening economic ties between India and the United Kingdom.

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Context: The United Kingdom-India Free Trade Agreement could be a catalyst for deeper engagement in the GCCs.

Significance of the India-UK Free Trade Agreement (FTA)

Strengthening Bilateral Ties: The FTA is poised to redefine India-UK economic relations, moving beyond traditional trade to focus on services, innovation, and talent exchange.
Post-Brexit Opportunity for the UK: The FTA offers the UK access to one of the world’s fastest-growing digital and services economies—India—helping reinforce its global role in services and tech.
Economic Boost for India: For India, the FTA promises increased UK investment, alignment with digital skilling goals, and expansion of high-value service exports.
Enabling Framework: By addressing double taxation, data localisation issues, and regulatory mismatches, the FTA can remove key barriers faced by businesses.

What are Global Capability Centres (GCCs)?

Global Capability Centres (GCCs) is a strategic outpost/branch set up by multinational corporations (MNCs) to perform specialised functions for their parent organisation.
Functions of GCC:
- Driving Innovation: Create new products or services, and conduct research.
- Managing Technology: Handling IT systems, software development, cybersecurity, and other tech needs.
- Handling Back-Office Tasks: They take care of finance, human resources, procurement, and customer support.
- Ensuring Compliance: They make sure the company meets legal requirements and manages risks in global operations.
In India, GCCs have evolved into Innovation Hubs and Centers of Excellence (CoEs).
Top Destinations for setting up GCCs in India: Bengaluru, Gurugram, Hyderabad, Mumbai, Delhi-NCR, and GIFT City

FTA a Catalyst for Global Capability Centres (GCCs)

India hosts over 1,500 GCCs, employing 1.9+ million professionals. These centers serve as innovation hubs for global corporations in R&D, cybersecurity, analytics, etc.
British firms increasingly see India not as a cost-cutting hub but as a co-innovation partner for high-end digital solutions.
The agreement can facilitate smoother movement of professionals and harmonised digital/data governance—key to scaling GCCs serving UK-based firms.
With proper policy backing, Indian GCCs can climb higher up the global value chain and attract more British collaborations.

Government Push for GCCs

Central Government Initiatives:
- National GCC Framework (Budget 2025): Under MeitY, in collaboration with NASSCOM, KPMG, Zinnov, and Invest India, a framework is being created to guide states on talent, infrastructure, and legal facilitation.
- No National Policy Yet: Despite rapid organic growth, there is no single national policy, prompting debate on whether one is needed.
State-Level Momentum:
- Uttar Pradesh Example: Hosted its first GCC Conclave (with TCS, Microsoft, HCL, etc.), showcasing tier-2 cities (Lucknow, Varanasi) as new GCC destinations.

Likely Impact of the FTA and GCC Growth

Boost to Innovation & Employment: More GCCs mean high-skill job creation and R&D growth, aligning with India’s digital transformation goals.
Cross-Border Talent Mobility: Easier professional movement between the UK and India could enhance talent exchange and diversity in both markets.
Knowledge Corridor: GCCs can help build a robust India-UK knowledge economy corridor, driving global competitiveness.
Investor Confidence: A well-designed FTA addressing real-world business frictions (e.g., taxation, data issues) can send strong positive signals to investors.