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Summary
India has become a major GCC destination, but several outdated assumptions can lead to delays, missed incentives and compliance gaps. GCC setup now requires careful planning across entity formation, location selection, data protection, FEMA and labour compliance.
The article examines five common assumptions around setup timelines, state selection, DPDP, FEMA and PoSH responsibilities. It explains why these areas need attention from the beginning rather than being handled after the GCC becomes operational.
The article also outlines specific checks for CFOs, GCC leaders and legal or compliance teams. A structured review at the planning stage can help companies address regulatory and operational issues before they become costly problems.
India has become a major destination for GCCs, but some of the assumptions guiding their setup still belong to an earlier era. A GCC today involves far more than cost savings and back-office operations. This means decisions around timelines, location, data, FEMA, and compliance need a closer look from the start. The actual risk lies in the gap between old assumptions and the current reality.
5 Assumptions on GCCs That Need a Closer Look
Some of these assumptions may have made sense when GCCs in India were primarily built around cost savings and support functions. As their role has expanded, the decisions behind setting them up need to reflect the regulatory, operational, and strategic realities of today.
Myth 1: Setting up a GCC in India takes over a year
Reality: The entity itself, a private limited company filed through the SPICe+ portal, is usually registered in a matter of weeks rather than months.
Much of the surrounding work, workspace fit-out, hiring leadership, and IT provisioning, can run simultaneously rather than waiting in sequence. What actually stretches a timeline out closer to a year isn't incorporation itself. It's treating every workstream as sequential when most of them don't need to be.
Why it matters: Companies planning around a 12-month runway often over-invest in buffer and under-invest in getting parallel workstreams moving early.
Myth 2: Any Indian state works the same for a GCC
Reality: Karnataka, Telangana, Maharashtra, and Tamil Nadu each run distinct GCC incentive frameworks.
The dedicated GCC policy in Karnataka includes rent reimbursement and exemptions on electricity duty, which are associated with headcount. Telangana uses its TS-iPASS fast clearance system rather than a dedicated GCC policy, and Tamil Nadu offers a tiered incentive model with stamp duty exemptions and payroll subsidies concentrated around Coimbatore and Madurai.
Labour and establishment rules also differ significantly between states.
Why it matters: If a location is chosen only for its brand recognition, it may result in missed incentives and make the regulatory process less efficient.
Myth 3: DPDP compliance can wait until the center is operational
Reality: The Digital Personal Data Protection Act applies the moment personal data of any individual in India starts getting processed, not from a formal go-live date. This includes the first batch of employee onboarding data or any parent-company records related to Indian data subjects during setup itself.
Why it matters: Companies that treat DPDP as a post-launch task are often already processing data that the Act covers well before they've built the consent and governance framework it requires.
Myth 4: FEMA only becomes relevant when it's time to send profits back to the parent company
Reality: FEMA governs the structuring decision right from the first day.
FEMA influences how shares are priced and issued to the foreign parent company, and the entry route that applies. It also governs how the investment in the form of equity/ debt is reported to the RBI within the prescribed window after allotment/ issuance of debt. Getting this wrong at incorporation creates a compliance gap that's considerably harder to fix later than it would have been to structure correctly upfront.
Why it matters: Treating FEMA as a later-stage repatriation issue indicates that the riskier structuring decisions are made without the scrutiny they actually need.
Myth 5: PoSH and labour compliance are HR's responsibility, not the board's
Reality: A Registrar of Companies order in Karnataka penalized a company ₹3,00,000 and its managing director, CFO, and company secretary ₹50,000 each, for every year the board report failed to disclose PoSH Internal Committee compliance. This is a requirement under the governance laws in India.
That liability remains with the officers signing off on the board report, not the HR function running the policy on an everyday basis.
Why it matters: Directors who treat PoSH as purely operational are exposed to personal, recurring penalty risk they may not realize applies to them individually.
The Pattern Behind the Myths
Something that connects all five myths is a habit of treating GCC setup as an administrative task handed downstream, to HR, to a local finance hire, or any other department available, rather than a structural decision the board and leadership actually own. These myths are still a part of the GCC environment as the consequences show up late most of the time. In many cases, the challenges are visible months after the wrong decisions were made. By then, these mistakes turn into an operational hurdle. These are strategic choices, which must be made through enough scrutiny when it actually matters.
What Leadership Should Check This Quarter
These assumptions are worth reviewing before they turn into larger compliance or operational issues. A quick check across the key areas can help leadership identify gaps and address them early.
- CFO: Make sure that the FEMA structuring and share pricing approach was reviewed by a qualified advisor before allotment. These priorities should not be assumed to be a formality handled during paperwork as part of the incorporation process.
- Head of GCC: Map the actual state incentive and labour code variance for the chosen location against the current assumption. This is particularly important if the site selection took place before running a formal comparison.
- Legal or Compliance Department: Verify that DPDP and other obligations are mapped against the point at which data actually started flowing. Confirm that the board report reflects current PoSH Internal Committee status accurately.
Rethinking the Assumptions
If any of these five assumptions sound familiar, whether you are planning a GCC or already operating one, it’s worth taking a closer look before they become compliance or operational gaps. Xpansa supports companies across the GCC lifecycle, from structuring and entity setup to GCC health checks, gap remediation and ongoing compliance and governance. Connect with our professionals to assess your GCC and identify the right next steps.
Note: The above listed myths and compliances listed are few of them and not the exhaustive list.
Ref: https://inductusgcc.com/consulting-led-gcc-setup-models-myths-risks-and-proven-accelerators/
Author Bio:
Aishwarya Shiva is a Manager for Business Partnerships, specializing in GCC advisory and partnership-driven growth. She collaborates with both B2B and B2C partners to provide strategic support for global enterprises looking to establish, scale, and optimize their business operations in India.
