In their article published in The Times of India, Radhika Saigal and Manoj Marwah explain how Union Budget 2026 marks a significant shift in strengthening India’s position as a preferred destination for Global Capability Centres (GCCs), particularly in the financial services sector. The Budget introduces measures aimed at improving tax certainty, regulatory clarity, and long-term investment confidence.
Expansion of the Safe Harbour Regime
One of the most important announcements in the Budget is the expansion of the Safe Harbour regime for IT and IT-enabled services. The introduction of a uniform 15.5% operating margin along with higher eligibility thresholds is expected to reduce transfer pricing disputes and provide greater tax predictability for GCCs. This move directly benefits financial services firms operating technology, analytics, and compliance functions from India.
Simplification of Advance Pricing Agreements (APAs)
The Budget also proposes streamlining the Advance Pricing Agreement (APA) framework. By consolidating service categories and improving procedural timelines, the government aims to reduce compliance burdens and enhance certainty in cross-border pricing arrangements. This reform enables firms to plan long-term GCC investments with improved clarity.
Encouraging Expansion into Tier-2 Cities
Another key focus area is promoting GCC growth beyond major metropolitan cities. By encouraging expansion into Tier-2 locations, the government seeks to unlock new talent pools, reduce operating costs, and drive balanced regional development. This geographic diversification strengthens the scalability of financial services GCCs in India.
Strengthening India’s Position as a Strategic GCC Hub
The reforms reflect a broader strategic intent to position India not just as a cost-effective offshore destination, but as a global hub for high-value financial services capabilities. GCCs in India are increasingly managing complex functions such as risk management, regulatory compliance, data analytics, and digital transformation, reinforcing India’s critical role in the global financial ecosystem.
Conclusion
As highlighted by Radhika Saigal and Manoj Marwah, Budget 2026 represents a pivotal moment for financial services firms evaluating India for GCC expansion. With enhanced tax clarity, simplified pricing mechanisms, and geographic growth incentives, the reforms strengthen India’s attractiveness as a stable and strategic destination for Global Capability Centres.
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