Tamil Nadu 2024-2025 Budget aims to elevate the State as a Global Capability Centers Hub
In a groundbreaking move, the Tamil Nadu government unveiled its ambitious budget for 2024-2025 with a major focus on positioning the state as a prime destination for Global Capability Centers (GCCs) in India. Pioneering the initiative, Tamilnadu becomes the first state in India to offer subsidies specifically tailored for Global Capability Centers, signalling a strategic move to attract and retain high-value business operations.
Under the budgetary provisions, the Tamil Nadu government is set to provide escalating incentives to Global Capability Centers that generate high-paying jobs within their operations. The subsidy structure is designed to support these centres over the initial three years, with a decreasing percentage in payroll subsidy – Starting from 30% in the first year, 20% in the second year, and 10% in the third year.
This incentive program primarily targets jobs with a monthly salary exceeding Rs. 1 Lakh, fostering an environment for high-end back-office activities for global companies. Global Capability Centers, commonly known as captive hubs, undertake a range of activities such as Research & Development, product design, and payroll processing, with a significant contribution from the Information Technology industry.
The focus on Global Capability Centers in Tamil Nadu is not only a strategic economic move but also aligns with global trends. According to NASSCOM, the growth of Global Capability Centers in India has transitioned from a ‘Proof of Concept’ stage to becoming ‘Centers of Strategic Importance,’ driven by the maturation of the Indian IT-BPM industry and its evolution beyond a mere cost centre.
Recent trends in Global Capability Centers activities include intellectual property creation, building competencies around emerging technologies, establishing Centers of Excellence, and taking full ownership of vendor management. Tamil Nadu, particularly Chennai, emerges as a thriving market for Global Capability Centers, securing the second position and occupying 39% of the overall market, with a dominant presence in the electronics and manufacturing industry.
Tamil Nadu’s Finance Minister -Thangam Thenarasu, attributes the Global Capability Centers boom in the state to a shift towards a knowledge economy, particularly highlighting advancements in state-of-the-art research, design, product prototyping, and global market testing. Furthermore, the budget allocates Rs. 2,295 crore to the Industries by the Investment Promotion and Commerce Department, facilitating the establishment of Global Capability Centers in Coimbatore and Madurai.
The Global Capability Centers revolution in Tamil Nadu is evident with 150 Global Capability Centers operating in the state across diverse industries such as financial services, automotive, telecom, manufacturing, healthcare, pharma, energy, and utility services. Prominent players in Tamil Nadu’s GCC landscape include the World Bank, Standard Chartered, Amazon, Walmart, AstraZeneca, and more.
Notably, this government initiative has received positive responses from industry experts. Ramkumar Ramamoorthy, Partner at Catalincs, acknowledges the historical significance of Global Capability Centers in India and sees Tamil Nadu’s move as a strategic play to reclaim the spotlight. He emphasizes the state’s unique advantage of a deep talent pool across technology and industry domains, catering to various sectors, which can potentially solidify Tamil Nadu’s position as a preferred destination for global companies of all sizes.
The recent announcement of the Tamilnadu Government’s Budget for 2024-2025, focusing on positioning the state as a prime destination for Global Capability Centers, presents a significant opportunity for SAS Partners and our clients looking to establish or expand their businesses in India. The ground-breaking move to offer tailored subsidies for Global Capability Centers showcases the state’s commitment to attracting and retaining high-value business operations.
Seizing Opportunities: SAS Partners’ Advisory on Tamil Nadu’s Global Capability Centers Incentive Initiative for Foreign Companies
As your trusted advisor, SAS Partners is uniquely positioned to guide businesses through the strategic implications of this initiative and help you leverage the incentives offered by the Tamil Nadu government for a seamless entry into the Indian market.
Understanding the Incentive Program:
The subsidy structure, with escalating incentives over the initial three years, is designed to support Global Capability Centers generating high-paying jobs. SAS Partners will work closely with the India Entry Business Clients to ensure compliance with the program’s criteria, particularly focusing on jobs with monthly salaries exceeding Rs. 1 Lakh. Our expertise in Financial Viability Assessment, Legal Entity Creation, and Vendor Management aligns seamlessly with the subsidy program’s goals, enabling India Entry Businesses to maximize benefits.
Tailored Support for High-End Back Office Activities:
With a spotlight on high-end back-office activities such as Research & Development, product design, and payroll processing, SAS Partners is equipped to provide comprehensive support. From Site Selection to securing necessary licenses and approvals, our consultancy services are tailored to facilitate your operations in line with the unique requirements of Global Capability Centers.
Expanding Geographical Opportunities:
The Budget Allocation of Rs.2,295 Crore (22.95 Billion) to the Industries by the Investment Promotion and Commerce Department signifies the government’s commitment to expanding Global Capability Centers in Coimbatore and Madurai. SAS Partners will guide you in navigating these new opportunities, offering our proven proficiency in diverse industries including Financial Services, Automotive, Telecom, Manufacturing, Healthcare, Pharma, Energy and Utility Services.
Capitalizing on Tamil Nadu’s Talent Pool:
Acknowledging Tamil Nadu’s deep talent pool across technology and industry domains, SAS Partners sees this as a strategic advantage for businesses. Our consultancy services extend to recruitment, ensuring they tap into the skilled workforce that aligns with the evolving landscape of GCC activities.
Seizing Competitive Edge:
By capitalizing on this incentive scheme, SAS Partners aims to position your business at the forefront of the evolving GCC landscape in Tamil Nadu. Our advisory services are geared towards helping you navigate the intricacies of the program, reclaiming the spotlight in a competitive market.
As your dedicated advisors, SAS Partners is committed to ensuring a smooth and successful entry into the Indian market. We look forward to discussing the tailored strategies that will propel your business towards success in Tamil Nadu’s burgeoning GCC ecosystem.
