Tier-2 Cities: The Next Frontier for GCC Growth Needs Payroll Incentives, Grade-A Infra

• India's next phase of Global Capability Centre (GCC) growth hinges on expanding beyond metros into Tier-2 cities.
• Industry leaders advocate for payroll-linked incentives, top-tier infrastructure, and cluster-led strategies to make Tier-2 cities competitive.
• Finance Minister Nirmala Sitharaman announced a national framework in Budget 2025 to guide states in promoting GCCs in emerging Tier-2 cities.
• Talent readiness, specialized skilling in AI, data, product engineering, and cybersecurity are crucial differentiators for future GCC expansion.
• Transfer pricing friction and tax predictability remain key challenges for GCCs moving into higher-value and IP-linked work.

Why It Matters: Expanding GCCs into Tier-2 cities requires strategic incentives, robust infrastructure, and skilled talent.