Global Capability Centres in India – what's involved
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
Private Limited Company – SPICe+ filing, MOA/AOA, registered office, PAN, TAN, GSTIN. Typically 14 - 21 days.
Intercompany service agreement, cost allocation methodology, benchmarked mark-up, and annual TP documentation.
Payroll structure, PF, ESI, professional tax, TDS on salary – compliant from hire #1.
Employee stock option plan design, FEMA compliance for foreign parent ESOPs, tax optimisation for employees.
Monthly GST, TDS, payroll processing. Annual audit, ITR, Form 3CEB, FLA Return. Fixed fee.
Annual TP study, benchmarking analysis, Form 3CEB certification. Defensible against scrutiny.
GCC setup timeline – week by week
Entity type, FDI route, cost-plus mark-up methodology, DTAA analysis. Intercompany service agreement drafted. This is the most important step – getting the commercial model right before incorporation.
SPICe+ filing, Certificate of Incorporation, PAN, TAN, GSTIN. Registered office established. Bank account initiation.
FC-GPR filed within 30 days of share allotment. Share valuation certificate from CA. Equity allotment to foreign parent confirmed.
PF registration, ESI (if applicable), professional tax, TDS on salary. Payroll software setup. Offer letter templates aligned with India employment law.
Board resolution, ESOP trust deed (for trust structure) or direct grant, FEMA compliance for foreign parent options. Employee communication plan.
Full compliance calendar, monthly reporting pack template, vendor onboarding, accounting software. Retainer goes live.
GCC setup in practice
APAC SaaS company scaled to a 40-person GCC in 8 weeks
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.
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
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.
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.
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.
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
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