State yet to excel in terms of Global Capability Centres: Industries Secretary

Speaking at the GCC Next Summit 2024, Arun Roy said promoting GCCs in Tamil Nadu has become one of the priority areas for the State government

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While the State generally ranks second or third in terms of economic parameters, it is yet to excel in terms of Global Capability Centres (GCCs), said Tamil Nadu Industries Secretary V. Arun Roy on Wednesday.

“Out of the 1,800 GCCs in India, nearly 300 are in Tamil Nadu. It is true that we have about 10% of India’s GCCs. But as a city, we are behindBengaluru, Mumbai, Hyderabad, National Capital Region, and Pune,” he said, speaking at the GCC Next Summit 2024 organised by Guidance Tamil Nadu and Kreateworks.

GCCs are the fastest growing sector of the Indian economy. The potential for GCCs is much higher. Promoting them has become one of the priority areas for the government of Tamil Nadu, Mr. Roy said.

“In the next 10 years, we can expect more global companies to move significant parts of their operations to India. This is not because of cost arbitrage, but because of knowledge arbitrage,” he said.

Advantages of State

Pointing out that Chennai and other cities had great potential for GCCs, Mr. Roy said Tamil Nadu’s key advantage is talent, with the State producing the highest number of talented and well- qualified engineers.

Chennai is ranked as the safest city, Mr. Roy said. The infrastructure is good, and many cities are well-connected to airports. The State’s economy is concentrated in Chennai, while cities like Coimbatore are ranked as the best Tier-2 cities for setting up GCCs.

There is a plan to take GCCs to smaller cities such as Tiruchi and Madurai, he said, adding that Tamil Nadu had better availability of quality office space, good air quality and comparatively less traffic congestion.

Scope for improvement

“We do recognise that a lot more needs to be done on each front,” Mr. Roy said. “For example, there is an airport (Chennai) but it is not as good as the ones in other competitor cities. We are working on the second airport near Sriperumbudur,” he said.

He also pointed out that data suggested that incremental office space absorption was much higher than incremental supply and at some point, the State was going to face an issue.

“We have recognised the problem. The State government is unlocking its own land bank. About 30 locations have been identified for office space development in participation with the private sector,” Mr. Roy said, adding that the State was pitching for manufacturing companies to set up GCCs.

Straightforward policy

He further said the State had a straightforward policy for Fortune 500 companies or equivalent ones. For globally renowned companies to set up GCC, 30 per cent of the pay bill will be reimbursed in the first year, 20 per cent in the second year and 10 per cent in the third. This was announced a few months back, and has already seen a lot of traction.

The State government is open to tweaking the policy based on feedback from the companies, he added.

Mr. Roy also released a report — Tamil Nadu: The Next Frontier for Global Corporations — by CBRE. As per the report, GCCs would lease 3-3.2 million square feet of office space in Chennai in 2025. Between 2025 and 2026, the city is set to add 12–13 million square feet of premium office space.

Published - November 27, 2024 10:06 pm IST