Karnataka set to be the first state to come up with GCC policy by August

(L-R) Karnataka IT-BT Minister Priyank Kharge, CM Siddaramaiah, and Karnataka IT Secretary Ekroop Caur

Karnataka is set to be the first state in the country to come up with a dedicated Global Capability Centre (GCC) policy to attract higher investments in the sector.

Speaking to Moneycontrol on the sidelines of the Bengaluru Tech Summit curtain-raiser event on July 12, Karnataka IT Secretary Ekroop Caur said: "Karnataka will be the first state to adopt a GCC policy. We are in the final stages, and the draft policy will be made public by August. The objective is to create a conducive environment for GCCs and attract investments by aligning with the state's ecosystem."

The state government has already engaged in stakeholder consultations with industry leaders and bodies like National Association of Software and Service Companies (Nasscom). "We will invite suggestions and feedback on the draft policy before finalising it," Caur added.

The state government's GCC policy is expected to prioritise Beyond Bengaluru clusters, including Mysuru, Mangaluru, Kalaburagi, and Tumkuru. Karnataka aims to capture over 55 percent of India's GCC market by 2030. It is also likely to announce incentives for companies investing in Beyond Bengaluru clusters.

A GCC is an offshore unit set up by a company in a foreign country to in-source IT and other related business functions.

Also, read: Karnataka Budget 2024: Government to introduce Global Capability Centre Policy to boost investment

On July 12, Karnataka Chief Minister Siddaramaiah had conducted a breakfast meeting with more than 200 CEOs from IT, semiconductor and electronics, AVGC, biotech, and startup organisations ahead of the Bengaluru Tech Summit on November 19-21

Siddaramaiah said, "The upcoming GCC policy of the Karnataka government will streamline regulations and provide incentives to encourage major companies to establish operations, particularly in Beyond Bengaluru areas."

Also, read: Karnataka, Tamil Nadu woo GCCs with incentives in state budgets

State IT-BT Minister Priyank Kharge said GCCs play a major role. He said: "40% of GCCs are located in Bengaluru. There are 485 GCCs across Karnataka, unmatched by any other state. We will publish an Ease of Doing Business (EODB) report for GCCs, and the state's first GCC policy will also be announced.'"

Also, read: Bengaluru dominates chip GCC's in India with 42% of total units, says report

Karnataka is also facing tough competition from Tamil Nadu, which has announced plans to incentivise the creation of high-paying jobs in new GCCs. TN Finance Minister Thangam Thennarasu, during the state budget presentation for 2024-2025 on February 19, stated that state plans to attract GCCs by offering a payroll subsidy: 30% in the first year, 20% in the second year, and 10% in the third year for jobs paying above Rs 1 lakh per month."

Also, read: TN budget proposes sops for high-paying jobs in capability centres, to promote women workers

Kharge said their focus will be on Beyond Bengaluru clusters. "Our focus Beyond Bengaluru has been on skill development, incubation, and innovation in sectors like aerospace in Belagavi, semiconductors in Mysuru, and startups in Mangaluru. We are also facilitating plug-and-play facilities for GCCs, anticipating the next wave of innovation to emerge from Beyond Bengaluru," Kharge said.

Kharge also announced plans for an Engineering R&D policy with localised incentives and investments to create more jobs and support plug-and-play GCC setups in smaller towns.

"An advisory committee for manufacturing technology will be established, with an initial budget allocation of Rs 19 crore to ensure the state is adequately prepared in terms of skills," he said.

Also, read: Karnataka's KEONICS to monetise land parcels, plans convention center near Bengaluru airport