With global capability centres (GCCs) turning into a substantial engine of growth and employment in the country, the government on Monday pledged to look at policies to provide them a boost while urging them to take part in the newly launched Employment Linked Incentive Scheme.
Noting that over 1,800 GCCs operate out of India, Anuradha Thakur, Secretary Department of Economic Affairs, said there is a need to study state-specific policies to understand how to further support GCCs.
“GCCs are [concentrated] in particular states. We need to see what policies they had on physical and digital infrastructure, regulatory policy initiatives that helped GCCs grow,” she said at the GCC Business Summit organised by CII, adding that these policies can then be tweaked to support their growth elsewhere.
Underlining that GCCs contribute about 1.8% to the country’s gross value added, she further said that there is a need to collectively work and benefit from them and said that they are now expanding beyond metros into Tier 2 towns.
Meanwhile, labour and employment secretary Vandana Gurnani urged GCCs to participate in the ELI scheme noting that there is a huge scope for employment of youth and women in these.
“We can partner with GCCs at the national and state level,” she said, adding that the scheme design and processes are very simple. At present, about 30-35% of the workforce in GCCs in India is made up of women employees, she further noted.
“Youth unemployment in India has dropped from 17.8% in 2017–18 to 10.2%, outperforming the global average of 13.3%. GCCs have played a key role in this progress and hold even greater potential to drive inclusive job creation for the future,” she said.
Underlining that the ELIs offer very substantive benefits for employers and employees, she said that there is international experience with countries like Singapore, Australia, Turkey and Germany also launching similar schemes. “Not only did they increase employment but they increased sustained employment and led to a rise in wages,” she said, adding that from an employer’s perspective, the ELI scheme brings down the cost of hiring.
Addressing the session, Sanjay Bahadur, Member (Income Tax), in the Central Board of Direct Taxes said that GCCs are growing at a rapid pace and are poised for robust growth over the next five to 10 years. They contribute 2% of the GDP and employ close to 30 million to 35 million people.
Given the complex nature of services that they provide, transfer pricing is one of the areas where issues crop in in the taxation sphere, he said. “There is a matrix of value addition in products and services provided by GCCs. This is where transfer pricing issues come in,” he noted.
Bahadur noted that other issues could be a special tax treatment for the GCC sector as well as quick resolution of disputes with some suggestions in the advance pricing authority scheme.
