Government has done its part on GCC, industry must build capabilities to meet AI challenge: CEA

New Delhi, India Jul 9, 2026 ALN: Chief Economic Adviser V Anantha Nageswaran recently emphasized the role of the government in supporting Global Capability Centres (GCCs) through various measures announced in the Union Budget. His remarks came during the CII GCC Summit, where he outlined the necessity for the industry to take proactive steps in skill development, capability enhancement, and fostering innovation to meet the challenges posed by the rapid advancement of artificial intelligence (AI).

The advent of AI technologies has introduced significant disruptions across various sectors, particularly by exposing outdated business models that rely heavily on routine, repetitive, and rule-based tasks. Nageswaran pointed out that businesses that continue to depend solely on low-cost execution are at risk of being displaced in the evolving market landscape. This observation underscores the urgent need for companies to reassess their operational frameworks and invest in more robust, innovative approaches.

In his address, Nageswaran highlighted the importance of collaboration between the government and the industry. He noted that the Union Budget has taken significant steps to address long-standing demands from the industry by simplifying and expanding the transfer pricing safe harbour regime specifically for GCCs. This revised framework introduces a uniform margin, significantly higher thresholds, and promises faster, more predictable approvals over a multi-year period. Such measures are designed to enhance tax certainty for these centres, thereby creating a more conducive environment for growth and investment.

Moreover, the government has initiated a national framework aimed at promoting the expansion of GCCs beyond the primary metropolitan areas into tier-II and tier-III cities. Nageswaran articulated that this initiative is not solely an economic objective but also a matter of fairness, advocating for equitable opportunities across the country rather than concentrating them in a few major urban centers. This approach aligns with the broader governmental strategy of decentralization, which aims to distribute economic growth more evenly across the nation and reduce the urban-rural divide.

Despite these supportive measures from the government, Nageswaran stressed that achieving leadership in the sector is a shared responsibility that cannot be solely reliant on government policy. "The government can build the runway, but it cannot fly the plane," he stated, emphasizing that the transition from a cost-centric approach to one focused on capability and innovation must be undertaken by firms and individuals within the industry. This statement reflects a broader understanding that while governmental support is crucial, the onus of adaptation and innovation lies primarily with the businesses themselves.

One of the most pressing challenges identified by Nageswaran is skilling. India produces a substantial number of graduates each year; however, a significant gap exists between the skills imparted during education and the competencies required by the industry. This misalignment highlights the critical need for educational institutions and businesses to collaborate in developing curricula and training programs that align more closely with market demands. Such partnerships can facilitate internships, hands-on training, and real-world project experiences, ensuring that graduates are better equipped to enter the workforce.

Furthermore, Nageswaran called upon the industry to focus on building capabilities and fostering innovation, noting that India's long-term competitive advantage will hinge on its ability to transition from a model based on cost competitiveness to one that emphasizes capability. He articulated that the deployment of artificial intelligence systems is not merely a technical challenge but also a governance one, stating, "Artificial intelligence does not build, deploy, or govern itself. Someone must design these systems, train them, test them, correct them, and hold them accountable." This highlights the multifaceted responsibilities associated with AI deployment, which encompass ethical considerations, accountability, and the need for skilled personnel to manage these technologies effectively.

As India positions itself as a global player in the AI landscape, the responsibility associated with deploying such systems is expanding, with a growing share of this work being undertaken within the country. Nageswaran reassured that AI does not necessarily diminish the role of workers in GCCs; rather, in well-managed centres, AI can enhance the value of each employee. He warned, however, that organizations that remain stagnant in their practices will face challenges, while those that adapt and innovate will thrive in the new economy. This adaptability is crucial as industries worldwide are increasingly integrating AI into their operations to improve efficiency and decision-making.

In his concluding remarks, Nageswaran cautioned against complacency in the face of current successes. While India's advantages in the global market have been cultivated over time, they are not guaranteed to persist. Competing nations are continually enhancing their capabilities, and as operational costs rise, the pool of skilled talent may become increasingly scarce. This dynamic underscores the importance of ongoing investment in skills development and innovation as essential strategies for sustaining competitive advantage. Failure to do so could lead to a decline in India's position as a preferred destination for GCCs and other technology-driven enterprises.

In summary, the Chief Economic Adviser's comments reflect a broader recognition of the transformative impact of AI on the business landscape. By urging the industry to take ownership of capability development and innovation, he underscores the necessity for a collaborative approach between government and industry to navigate the complexities of the evolving market. As India seeks to solidify its position in the global economy, addressing the challenges of skilling, innovation, and ethical governance in AI will be paramount for future success. The future of India's economic landscape will depend on the collective efforts of both the government and the private sector to create an environment conducive to growth, innovation, and sustainable development.