India is a prominent innovation hub for global capability centres (GCCs), but its potential as a critical consumer market is equally significant.
More than 1,800 GCCs in the country are estimated to generate economic activity of $241 billion in FY2025 through local spending and supplier chains.
Simultaneously, India’s consumer spending size is projected to grow to $4.3 trillion by 2030, making it the world’s second-largest consumer market. This is driven by a significant rise in high-margin spending on non-essential goods and services.
These factors guide the GCCs’ strategy to function as the R&D engine for local business units, driving market penetration and localisation.
South Korean automaker Hyundai Motor India saw early success in India with the launch of its Santro in 1998. The company built a dedicated R&D center, HMIE, in Hyderabad in 2006, to capitalise on its success. This centre focused on developing later models like the Creta specifically for the Indian market.
Hyundai recently solidified this commitment by announcing a major investment with 60% dedicated to R&D, which the CEO stated is “key to take on local brands”. This came after Hyundai went for an IPO (Initial public offering) in 2024.
Similarly, Samsung established its Bengaluru R&D centre in 1996 to develop “India-first” features for its domestic sales. After starting Indian operations in 1995, Cisco too, opened its R&D centre in 1996, quickly growing it from a workbench into their second biggest R&D centre by 2010s.
Pareekh Jain, CEO and lead analyst at Pareekh Consulting, attributes this trend to the “rise of the localisation manufacturing wave and the increase in domestic demand in India.”
How Co-location Impacts R&D
Co-locating GCCs and business units (BU) creates a closed innovation loop, driving deeper market success.
Dr Joginder Singh, senior director, global sourcing operations, Agilent Technologies, noted that the GCC provides the digital and design expertise, while the local business unit brings crucial market and customer insight.
Achyuta Ghosh, executive research leader at HFS Research, explained that this co-location enables faster innovation and localisation, stating: “When a global parent combines a strong local business unit with a GCC that drives customised R&D, it achieves far deeper market penetration. The GCC enables faster innovation and localisation, while the business unit translates that into market success.”
Jain suggested that R&D centres should be proactive instead of reactive. This means they need to focus on capability building for both local and global R&D opportunities.
They also require internal alignment for these opportunities, which for local R&D means aligning with local sales and business teams. Finally, there needs to be alignment with local manufacturing units wherever applicable, or they should proactively make a business case for, and support manufacturing in India.
Transforming operational resilience
Operational resilience is no longer just about avoiding failure, it’s about distributed control and shared accountability.
As Dr Singh explained, the hybrid setup strategically pairs manufacturing in one region, like Tamil Nadu, with a digital GCC in another, such as Bengaluru. This pairing “mitigates supply chain and labor risks,” granting global players end-to-end control and strategic co-ownership of innovation. This is a critical evolution because, as Singh noted, “Companies increasingly adopt a ‘networked enterprise,’ where the GCC is not a support arm but a strategic co-pilot co-owning P&L impact, innovation, and operational transformation.”
Finally, this synergy acts as a global hedge for geopolitical risk. LG Electronics and Hyundai’s IPO signals the same.
Alouk Kumar, CEO of Inductus Group, said that this strategy serves a dual purpose: “it raises capital in a politically stable jurisdiction (India), de-risking the parent’s financial model from its home country’s volatility, and it publicly monetises the long-term investment made in the Indian capability centre.”
This makes it a powerful tool for geopolitical risk mitigation and capital diversification.
Some avoid setting up business units
The main reason certain companies forgo establishing a business unit in India alongside their GCCs lies in strategic choices about market size and the nature of their product.
Product-based companies, such as those in the automotive or consumer tech sectors, deliberately seek BU + GCC synergy because they need to be close to their consumers.
Having both units co-located lets them design, test, and adapt products in real time for the local market. For companies like SAP and Microsoft, the vast size of the Indian market has justified this dual investment, making the establishment of both R&D centres and sales teams a logical step.
Conversely, software companies often serve global markets with standardised platforms. Their GCCs, therefore, focus on scale and engineering excellence rather than local market customisation.
For retail and other brands, the decision comes down to the size of the opportunity. According to Gaurav Vasu of UnearthInsights, if India is not a “big enough market,” a company will not set up both a GCC and a sales centre.
For example, brands like Tesco and Target may have GCCs in India but no retail stores, as 90% of their revenue might be generated elsewhere, like the US. Similarly, a company like Tesla previously chose not to set up a BU because it didn’t view India as a major market at the time.
Therefore, the lack of a BU is often a calculated business decision based on the market’s size, sector saturation, and the company’s global strategy.
Future Outlook
The move toward an IPO for Indian BUs and their aligned GCCs is the definitive sign of a successful, mature partnership. This validates that India is a major consumer market, not merely a talent source.
As seen with LG India and Hyundai India, their IPOs confirm the GCC’s evolution.
Sanju Ballurkar, president, Experis, ManpowerGroup India, said that the move toward IPOs marks the next phase in the evolution of GCCs — from their origins as cost-arbitrage support teams to independent, innovation-led, and value-creating entities. “It demonstrates the parent company’s long-term commitment to India.”
An IPO is a logical step to unlock local value and signal investor confidence, positioning India as a self-sustaining innovation hub.
Ghosh captured the ultimate consequence of this maturation: “When a company’s India business unit and GCC reach maturity, an IPO is a logical way to unlock local value. It signals that India is not only a sales market but a strategic base for innovation, scale, and investor confidence.”
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