The Union Budget 2025 indicates the government’s shifting focus towards tier-2 cities for the expansion of global capability centres (GCCs), moving beyond traditional hubs like Bengaluru, Hyderabad, Delhi, Chennai, Mumbai, and Pune.
Finance minister Nirmala Sitharaman has highlighted plans to boost talent, develop infrastructure, and introduce industry-friendly policies in tier-2 cities.
To boost talent, the government has announced the establishment of a centre of excellence in AI for education and the awarding of 10,000 new fellowships to students at IITs and IISc over the next five years.
Industry leaders had already anticipated this development.
Alouk Kumar, founder and CEO of Inductus, said, “The success of GCCs in India to the tune of 70% depends upon the right kind of resources.” He pointed out that finding skilled talent is now a bigger challenge than setting up office spaces, leading some GCCs to struggle with hiring difficulties.
Kumar proposed expanding beyond traditional locations to leverage the talent available in tier-2 cities.
Raghavendra Vaidya, MD and CEO of Daimler Truck Innovation Center India said, “We hope the government can streamline the process of running a GCC from a tax and infrastructure standpoint. Investing in infrastructure would be greatly beneficial.”
The Zinnov-Nasscom India GCC Landscape report shows a rise in tier-2 and tier-3 city GCCs, increasing from 5% in FY2019 to 7% in FY2024. These Nano GCCs are expected to grow by 15-20% by 2025, with 25-30% growth projected in the following years.
According to AIM Research, cities like Chandigarh and Indore, each housing 4% of total GCCs, are becoming new hotspots for expansion. While Bengaluru and Hyderabad are still leading, many companies are exploring alternative locations to tap into skilled graduates from smaller cities.
With tier-2 cities home to many engineering, IT, and business institutions, experts believe this shift will help GCCs find the right talent while spreading economic benefits across more regions.
In a major push for education and skill development, the finance minister announced a CoE in Artificial Intelligence for Education with a total outlay of INR 500 crore. This initiative builds on the three AI centres set up in 2023 for agriculture, healthcare, and sustainable cities.
Sitharaman also revealed plans for five National Centres of Excellence for Skilling, designed to equip the youth with industry-relevant expertise. “These centres will be set up with global partnerships to support Make for India and Make for the World manufacturing,” Sitharaman stated.
The initiative will cover curriculum design, trainer training, a skill certification framework, and regular assessments.
To strengthen higher education, the government is investing in the expansion of IIT infrastructure. Over the past decade, student intake at IITs has doubled from 65,000 to 1.35 lakh.
Additional facilities will be developed at five IITs established post-2014, creating space for 6,500 more students. Hostel and other infrastructure capacity at IIT Patna will also be expanded
