GCC & Captive Centres · India Advisory

GCC Setup in India —
End-to-End Advisory

Setting up a Global Capability Centre in India requires more than incorporation. Entity structure, cost-plus pricing, ESOP design, payroll, and ongoing compliance – all from one firm.

What it is

Global Capability Centres in India

A Global Capability Centre (GCC) – also called a captive centre or shared services centre – is an India entity wholly owned by a foreign company that provides services back to the parent. Unlike a branch or liaison office, a GCC is a full private limited company with its own employees, payroll, compliance calendar, and intercompany service agreement with the foreign parent.

India hosts over 1,700 GCCs employing more than 1.7 million professionals. The most common functions: software engineering, data analytics, finance & accounting shared services, and legal/compliance operations. The average GCC takes 6–8 weeks to become fully operational from first engagement.

The commercial model is typically cost-plus: the India GCC invoices the foreign parent for all its costs plus a mark-up (typically 8–15%). This mark-up is the taxable profit in India. Getting the cost-plus model and transfer pricing documentation right at setup is critical – it determines your India tax liability for the life of the entity.

Full GCC setup — what's included

Entity incorporation

Private Limited Company – SPICe+ filing, MOA/AOA, registered office, PAN, TAN, GSTIN.

14–21 days

Cost-plus pricing model

Intercompany service agreement, cost allocation methodology, benchmarked mark-up, and annual TP documentation.

TP-safe from day one

HR & payroll setup

Payroll structure, PF, ESI, professional tax, TDS on salary – compliant from hire #1.

Hire-ready

ESOP structuring

Employee stock option plan design, FEMA compliance for foreign parent ESOPs, tax optimisation for employees.

FEMA compliant

Ongoing compliance retainer

Monthly GST, TDS, payroll processing. Annual audit, ITR, Form 3CEB, FLA Return.

Fixed fee

Transfer pricing documentation

Annual TP study, benchmarking analysis, Form 3CEB certification. Defensible against scrutiny.

Audit-defensible

GCC setup timeline — week by week

Structure & pricing designWeek 1

Entity type, FDI route, cost-plus mark-up methodology, DTAA analysis. Intercompany service agreement drafted.

IncorporationWeeks 1–3

SPICe+ filing, Certificate of Incorporation, PAN, TAN, GSTIN. Registered office established. Bank account initiation.

FEMA & RBI filingWeek 4

FC-GPR filed within 30 days of share allotment. Share valuation certificate from CA. Equity allotment confirmed.

HR & payroll infraWeeks 3–5

PF registration, ESI, professional tax, TDS on salary. Payroll software setup. Offer letter templates.

ESOP planWeeks 4–6

Board resolution, ESOP trust deed or direct grant, FEMA compliance for foreign parent options.

Operational handoverWeek 6+

Full compliance calendar, monthly reporting pack template, vendor onboarding, accounting software. Retainer goes live.

GCC setup in practice

Singapore · APAC SaaS · Series C

APAC SaaS company scaled to a 40-person GCC in 8 weeks

The Challenge

Company needed to move from 0 to 40 engineers in Pune. Entity, payroll, ESOP trust, cost-plus pricing, and compliance all required simultaneously – with a hard deadline driven by an upcoming fundraising round.

What We Delivered

Entity incorporated in 19 days. Payroll running by week 6. ESOP trust structure in place. Cost-plus model benchmarked and documented. Compliance retainer active from month 2.

40-person team fully compliant from hire #1. ESOP plan approved. Zero payroll or FEMA gaps on first audit.

What GCC setups get wrong

Cost-plus mark-up set without benchmarking

Setting a 10% mark-up without a formal benchmarking study exposes the GCC to transfer pricing adjustment. The mark-up must be comparable to what unrelated parties earn for equivalent services. TNMM benchmarking using CMIE Prowess data is required annually.

ESOP documentation gaps

Foreign parent ESOPs for Indian employees require FEMA compliance at every stage – grant, vesting, exercise, and remittance. Missing FEMA filings at exercise create compounding liability that can be costly to regularise.

No intercompany service agreement at inception

The service agreement between the GCC and the foreign parent must be in place before the first invoice is raised. Backdated agreements are a red flag in TP audits. We draft and execute the agreement as part of incorporation.

Under-capitalisation at setup

GCCs frequently start with minimal share capital and fund operations through interest-free loans or cost-sharing arrangements. These have specific FEMA and TP implications. Capital structure should be planned before incorporation.

GCC setup questions

For technology and analytics GCCs, the arm's length mark-up (operating profit / total costs) typically ranges from 8–15% based on benchmarking studies using CMIE Prowess or TP Catalyst databases. The appropriate mark-up depends on the functions performed, assets used, and risks borne by the India entity.

Yes. Many GCCs have a mix of direct India hires and secondees from the foreign parent. Secondees have different tax and FEMA treatment – their costs must be handled separately in the intercompany service agreement and TP documentation.

For commercial GCCs providing services to the foreign parent, a Private Limited Company is strongly preferred. A branch pays 40% tax (vs 25.17% for a company), has restricted activities, and requires RBI approval. The added compliance burden of a branch is rarely justified.

Yes. The Annual Return on Foreign Liabilities and Assets (FLA) must be filed with the RBI by 15 July each year by every Indian company with FDI. A GCC that has received share capital from its foreign parent must file the FLA. Non-filing attracts compounding charges.

A GCC providing services to its foreign parent can invoice in USD or another foreign currency. The foreign exchange received must be converted to INR within the timelines prescribed by FEMA and reported through the authorised dealer bank. GST applies at 0% (export of services) on GCC invoices to the foreign parent.

GCC Setup in India —End-to-End Advisory