Karnataka Global Capability Center Policy 2024-2029: Key Features

Posted by Written by Melissa Cyrill Reading Time: 4 minutes

The Karnataka Global Capability Center (GCC) Policy, launched November 2024, focuses on AI, collaboration between academia and the private sector, R&D, talent development, and expanding investment zones beyond the capital Bengaluru through fiscal, regulatory, and tax incentives.

The southern state of Karnataka launched India’s first dedicated policy for Global Capability Centers (GCCs) in November, marking a significant milestone in the state’s economic and innovation landscape.

Formally released on November 19, 2024, after putting out a draft in September, Karnataka’s GCC policy aims to catalyze the establishment of 500 new capability centers, bringing the total to 1,000 by 2029. This initiative is projected to create 350,000 jobs and generate an economic output of US$50 billion.

With global competition from regions like Eastern Europe and Southeast Asia, India’s scale, talent, and mature ecosystem keep it a preferred destination for GCCs. Karnataka differentiates itself from other states by integrating talent, infrastructure, and innovation support, attracting global enterprises. The state plans to develop three global innovation districts in Bengaluru, Mysuru, and Belagavi, further decentralizing GCC operations.

Highlights of the Karnataka Global Capability Center Policy: 2024-2029

  1. Workforce development and incentives
  • The policy focuses on fostering a robust talent pool through reimbursed internship stipends for up to 100,000 students.
  • GCCs will benefit from a 50 percent reimbursement on these stipends, emphasizing skilling and real-world industry exposure.
  • Additional incentives include a five-year electricity duty exemption, enabling GCCs in Beyond Bengaluru areas to transition to industrial power tariffs.
  • Property tax reimbursements and customized incentive packages will be offered for mega projects.
  1. Infrastructure expansion and innovation clusters
  • The government has announced the creation of an electronics manufacturing cluster (EMC) in Mysuru, boosting the state’s manufacturing capabilities.
  • Bengaluru Global Innovation District, under the Knowledge, Wellbeing, and Innovation City (KWIN City) initiative, will be established to foster cutting-edge innovation.
  • Special attention will be given to ‘nano GCCs’, small-scale centers with 5 to 50 employees, which will enjoy incentives without minimum employment or investment requirements.

Karnataka’s advantage: A hub for GCC growth

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Karnataka’s leadership in India’s innovation ecosystem is unparalleled. Housing over 30 percent of the country’s GCCs and 35 percent of its workforce, the state’s talent pool and favorable business environment have been pivotal in attracting multinational corporations (MNCs).

The state ranked first in the India Innovation Index 2021 by NITI Aayog and continues to flourish through sector-specific policies. With a diversified presence across industries, Karnataka’s GCCs contribute significantly to customer engagement, research, and value creation for MNCs.

Additional strengths:

  • World-class infrastructure: Supports industries with state-of-the-art facilities and seamless connectivity.
  • FDI leadership: Attracted US$51.03 billion between 2019-2024, reinforcing its position as a top investment destination.
  • Startup ecosystem: Recognized as India’s largest startup hub and unicorn capital, fostering co-innovation opportunities.
  • Dynamic culture: A cosmopolitan environment that enhances people-to-people connectivity and rapid growth potential.

READ MORE: Investing in Karnataka, India: State Profile, Infrastructure, and Enabling Policies

Vision 2030: A sustainable and inclusive ecosystem

The policy aligns with Karnataka’s vision of creating a sustainable, inclusive, and high-value GCC ecosystem by 2030. The focus areas include:

  1. Workforce empowerment: Lifelong learning, upskilling, and mentorship programs tailored for women and transgender employees.
  2. Adaptive work models: Embracing hybrid work setups to balance well-being and business continuity.
  3. Sustainability: Promoting green initiatives and ethical business practices.

Strategic pillars of the policy

  1. Talent development:
  • Partnerships with leading institutions for global leadership development.
  • Focused efforts on both technical and soft skills training.
  • State-supported research collaborations between academia and GCCs.
  1. Strengthening the local ecosystem:
  • Innovation labs and Centers of Excellence (CoEs) will prioritize AI and deep-tech advancements.
  • Beyond Bengaluru initiative aims to decentralize growth to cities like Mysuru, Mangaluru, and Hubballi-Dharwad-Belagavi.
  • Special packages, such as rental reimbursements and EPF contributions, will encourage GCC expansion in these regions.
  1. Infrastructure and incentives:
  • Establishment of three new technology parks, including two outside Bengaluru.
  • Sustainable infrastructure initiatives, including smart city mobility and enhanced regional connectivity.
  1. Regulatory easing:
  • Creation of a Dedicated GCC Support Unit to streamline operations.
  • Fast-track approvals within 45 days to boost investor confidence.
  • A commercial real estate portal for easy access to available spaces.
  • Support services for GCC employees, including information on schools, healthcare, and social infrastructure.

Beyond Bengaluru: Decentralizing growth

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The Beyond Bengaluru initiative is a cornerstone of the policy, aiming to spread the GCC ecosystem across the state and beyond its metropolitan hub. Cities like Tumakuru and Mangaluru and the Hubballi-Dharwad-Belagavi region will benefit from targeted incentives, encouraging early-stage startups and fostering a culture of innovation outside the capital Bengaluru.

The Beyond Bengaluru Cluster Seed Fund will support early-stage start-ups, fostering innovation and entrepreneurship outside the capital. – Nasscom Report

Focus on AI and deep-tech

Artificial Intelligence (AI) is a key driver of the Karnataka GCC Policy. A Centre of Excellence for AI will be established in Bengaluru, alongside an INR 1 billion AI Skilling and Innovation Fund. These initiatives will:

  • Develop AI-centric curricula in collaboration with academic institutions.
  • Support joint research projects and innovation challenges.

Summary

The Karnataka GCC Policy 2024-2029 represents a transformative vision to position the state as a global leader in innovation and economic development. With its focus on talent, infrastructure, regulatory ease, and decentralization, the policy ensures Karnataka remains at the forefront of the GCC growth story. By fostering an inclusive and future-ready ecosystem, Karnataka is set to drive local and global economic transformation, reinforcing its role as the nerve center for GCCs worldwide.

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