• Karnataka plans to double its Global Capability Centres (GCCs) to 1,000 by 2029, creating 350,000 jobs and generating $50 billion.
• The draft policy includes incentives like partial rent reimbursement and patent fee support to encourage GCC growth.
• The government also plans to establish three new tech parks and fund skills courses and research projects.
• This move aligns with the national strategy of positioning India as a global technology powerhouse.

In a significant stride towards fortifying its position as a global technology hub, the Indian state of Karnataka has unveiled an ambitious plan. The state aims to double the number of its Global Capability Centres (GCCs) to 1,000 by 2029. This initiative, outlined in a recently launched draft policy, is designed to attract more foreign companies to establish local offices in the state. The move is expected to create 350,000 new jobs and generate an economic output of $50 billion.

GCCs, initially established as low-cost outsourcing hubs, have significantly evolved over the years. Today, they support their parent organizations by providing a wide range of services, including daily operations, finance, and research and development. More than 1,700 GCCs currently operate throughout India, employing more than 1.9 million individuals. According to a recent report by the IT industry body Nasscom and consulting firm Zinnov, this number is projected to increase to between 2,100 and 2,200 by 2030, potentially employing between 2.5 million and 2.8 million people.

Incentives and Infrastructure Development

The draft policy, which is the first of its kind among Indian states, includes several incentives to encourage GCC growth. These incentives comprise partial reimbursement of rents paid by GCCs, financial support for patent fees incurred by the centres, and companies may receive exemptions from electricity duties based on the number of employees they hire. The government in a statement said that these incentives are also meant to encourage companies to set up operations in cities outside the tech hub of Bengaluru, such as Mangaluru, Mysuru, and Tumakuru.

Apart from this, the government also plans to establish three new tech parks, fund some skills courses, and provide grants for research projects - especially those that focus on artificial intelligence. This move is in line with the global trend of leveraging AI to drive economic growth and job creation. The draft policy will be open for inputs until Nov. 11.

Historical Similarities and Future Prospects

Historically, similar initiatives have been undertaken by various governments worldwide to attract foreign investment and boost local economies. For instance, the Chinese government has been actively promoting the development of its semiconductor industry, seeking foreign investments for the development and design of fabs, ATMP, among others. Similarly, the Canadian government has been working on a Rural Economic Development Strategy to boost the economy of its rural areas.

The Karnataka government's move is a significant step towards transforming the state into a knowledge-based economy. It aligns with the broader national strategy of positioning India as a global technology powerhouse. The policy also reflects the growing recognition of the role of GCCs in driving economic growth, creating high-value jobs, and fostering innovation.