Mohali as GCC hub, Punjabs testing ground

THE Government of Punjab is making a bid to put Mohali on the Global Capability Centre (GCC) map. The government's recent collaboration with Zinnov Management Consulting at its Bengaluru conference, alongside deliberations within Invest Punjab, signals that GCCs are becoming important to the state's investment strategy. The proposition deserves examination not as to the size of incentives, but as to whether they address the economics determining where a GCC locates and grows. Punjab's Industrial and Business Development Policy 2026, covering IT, ITeS, data centres and GCCs, targets roughly Rs 75,000 crore in investment. It offers a capital subsidy of up to 20% of fixed investment, a 75% rebate on net state GST, rental support of Rs 10 per square foot, full stamp-duty and electricity-duty exemption and an employment subsidy reported at Rs 7,500 per employee per month. Beyond these incentives, the economics of multinational location decisions establishes that the place itself matters. Incentives reduce location costs, but these are also the easiest part of the template for any other state to replicate. Beginning from the location framework, scholars of industrial clustering point to skills, networks and agglomeration as critical factors. Against this context, it is important to recognise that GCC economics is changing. The conventional assumption that a centre needs 400-500 employees to achieve viable scale is becoming less relevant. Roughly 35% of new GCCs now launch with smaller teams, making productivity per employee increasingly important. A captive GCC can cost up to 25% more than outsourcing once salaries, premium real estate and expatriate oversight are accounted for. Its justification therefore lies in the capabilities the centre develops, rather than simply the cost of performing a task. Moreover, roughly 94-95% of India's GCCs still sit in six tier-1 hubs, and two-thirds of the new GCCs in the past two years chose tier-1 over cheaper alternatives. A 2025 roundtable of GCC leaders reiterated why talent, not cost, decides where a centre gets built. Cost differentials were "unlikely to make or break a deal" against the availability of the right people. In the present scenario, this talent should not just be IT workers but engineers with AI or machine-learning skills. Development economists have also long observed that growth tends to concentrate around particular hubs. Therefore, a successful Mohali cluster will not automatically guarantee a 'successful Punjab GCC model' and does not guarantee pulling Ludhiana or Amritsar into its orbit. Without investment in social infrastructure and transit links, gains could remain geographically narrow. At the same time, GCC expenditure and employee spending can create wider linkages. Industry estimates place their wider economic value at roughly 2.6 times their own value. The more immediate concern is what kind of GCC Punjab should attract. Research on AI's impact estimates that between 40,000 and 1,50,000 India-based GCC roles could be displaced by 2030. Centres built around repetitive execution are more exposed, while those that own business outcomes are better positioned. Recognising the changing nature of the GCC industry, other states, including Gujarat and Maharashtra, support intellectual property and R&D. Gujarat provides up to Rs 10 lakh per patent, while Maharashtra provides 25% of R&D expenditure, capped at Rs 2 crore per centre. Punjab's package remains oriented towards capital expenditure and floor space. If the objective is higher-value GCC functions, that balance deserves reconsideration. As Punjab bets big to lead in the GCC race, it may be recognised that the state need not enter a campus-size contest with Bengaluru. A more promising opportunity may lie in sub-400 FTE, AI-native centres, where minimum intelligence matters more than physical scale. The state could give greater attention to transfer pricing and safe-harbour certainty, including faster and more predictable advance pricing agreements. At the same time, there are lessons to be learnt from other states. Maharashtra, for instance, grants incentives by size of the GCC instead of a blanket incentive amount. It grades five size bands from a 100-employee centre with Rs 50 crore of investment to an ultra-mega centre with more than 1,000 employees and Rs 750-crore investment. Maharashtra has taken active policy steps to extend GCC growth beyond Mumbai and Pune by identifying Nashik, Nagpur and Chhatrapati Sambhajinagar as second-tier destinations. GIFT City has also initiated different policy initiatives for attracting the best GCC companies and talent inhouse. It has eased the conditions under which a build-operate-transfer centre changes hands and allowed senior positions to be staffed on the basis of professional certification rather than a fixed number of years of experience. Punjab has assembled the conventional ingredients of a GCC policy. The harder task is aligning them with the economics of location. If talent is the principal advantage, policy should turn it into productivity. If smaller, AI-native centres are becoming more viable, incentives should not be designed around large campuses. Lastly, if higher value functions are more durable, intellectual property, R&D and regulatory certainty deserve greater weight. The test for Punjab is whether Mohali can convert its cost and talent advantages into the productivity and institutional depth that give a multinational a reason to establish, expand and retain operations here. Anmol Rattan Singh is co-founder and Policy Lead at PANJ Foundation. Sirjan Kaur is Development Lead at PANJ Foundation.