A Global Capability Centre (GCC) is an Indian subsidiary that performs engineering, finance, data, operations or support work for the UK group. The usual path is a pilot team through an Employer of Record, a subsidiary at 20 to 50 people, and scaled operations on a cost-plus pricing model. UK regulated firms must also meet the PRA and FCA third-party rules when work moves to a group company in India.
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Key facts
| What it is | A wholly owned Indian subsidiary providing services to the UK group |
|---|---|
| Typical pricing | Cost plus a benchmarked mark-up, documented with a transfer pricing study |
| Revenue and GST | Services to the UK parent can qualify as zero-rated exports of services where conditions are met |
| PE risk | Managed by keeping the Indian company independent in operations, contracts and day-to-day decisions, and tracking UK staff days |
| Regulated UK firms | PRA SS2/21 (third-party risk) and FCA SYSC 8 apply to work moved to service providers, including group companies |
| Data | UK GDPR transfer mechanism and India's DPDP Act both apply |
| Scale path | Pilot, subsidiary, build, scale, with optional build-operate-transfer |
Why UK groups build in India
- Capability, not only cost: engineering, data, cyber, risk, finance operations and product teams that are hard to hire in the UK at pace.
- Time zone: India's working day overlaps the UK morning, allowing follow-the-sun support.
- Scale options: a team can grow from a handful to hundreds under the same legal entity.
- Policy support: several Indian states have centre-specific policies and incentives; check the current terms and eligibility before choosing a city.
The four operating models
| Model | How it works | Good for | Watch for |
|---|---|---|---|
| Employer of Record pilot | EOR employs the first team under your direction | Proof of concept in the first 3 to 9 months | PE risk if UK managers direct the work; costs per head |
| Captive subsidiary | Your own Indian company employs the team | Long-term capability | Full compliance, transfer pricing and governance |
| Build-operate-transfer | A partner builds and runs the centre, then transfers it to you | Groups that want speed without a heavy first-year management load | Transfer terms, key staff retention, tax on transfer |
| Shared or hybrid | Part captive, part vendor-run | Variable demand | Governance across vendors |
Regulated UK firms: moving work to a group company
A UK bank, insurer or investment firm moving work to its Indian group company is treated as using a service provider, even though the counterparty is a subsidiary. The firm remains responsible for the activity. Expect to cover the PRA's third-party risk expectations and the FCA's SYSC 8 rules: a materiality assessment, due diligence, a written agreement with audit and access rights for the firm and its regulators, exit and stressed-exit plans, business continuity, data and security controls, and ongoing monitoring. The Indian entity's own regulators, such as RBI or SEBI for financial services work done in India, may also have requirements. Raise the plan with your compliance team before the pilot starts.
Tax and pricing: keeping it defensible
- Pricing: cost plus a mark-up supported by a benchmarking study, reviewed every year. See transfer pricing.
- GST: services provided to the UK parent can be zero-rated exports if the place of supply, payment in convertible foreign exchange and other conditions are satisfied.
- Permanent establishment: keep strategy, contract authority and key staff decisions inside the Indian company or clearly governed, and log UK staff days. See the treaty guide.
- UK CFC and anti-avoidance: document where the strategic control sits. See UK parent obligations.
A staged build
- Stage 0: define the scope, the roles and the success measures; run a two-city comparison.
- Stage 1: pilot with an EOR, or form the subsidiary and hire the first 10 to 20.
- Stage 2: add leadership, build the compliance and security framework, move to a permanent office.
- Stage 3: scale hiring, add functions and review the pricing and tax position.
- Stage 4: decide whether to keep expanding, add a second site or move to a hub model.
Leadership, culture and governance
The centre needs a head who is empowered to run it, a UK sponsor, shared objectives, and regular joint working with the UK teams. Align hiring bands, performance review cycles and share plans across the countries. See hiring in India. For regulated firms, ensure the board and risk committees receive reporting on the centre.
Official sources
Check the rules at the primary sources: Income Tax Department (India), Reserve Bank of India, Ministry of Corporate Affairs, HMRC, Companies House and the UK legalisation service for apostilles.
Frequently asked questions
What is a Global Capability Centre?
A captive centre, usually an Indian subsidiary, that carries out engineering, finance, analytics, operations or support work for its parent group.
How big should a UK company's first India team be?
Many groups start with a pilot of 10 to 20 people, often through an Employer of Record, then form a subsidiary once the model is proven.
Can a PRA- or FCA-regulated firm move work to an Indian group company?
Yes, but the rules for third-party arrangements still apply to a group company, and the activity remains the regulated firm's responsibility. The firm must assess materiality, perform due diligence, put an agreement in place with audit and access rights, and plan for exit.
How is a captive centre priced?
Usually at cost plus a mark-up benchmarked against comparable independent companies, documented in an annual transfer pricing report.
Are services to the UK parent zero-rated for GST?
They can be, as exports of services, if the conditions on place of supply, payment in convertible foreign exchange and the relationship between the parties are met. Confirm the position before invoicing.
Related guides
Choosing an Indian Structure as a UK Company: Subsidiary, Branch, Liaison Office, LLP or Employer of Record
How a UK company should choose between an Indian subsidiary, branch, liaison office, LLP or Employer of Record, and whether to hold it directly or through an intermediate company.
Read the guide →Transfer Pricing in India for UK-Owned Subsidiaries: What the Indian Rules Require and How They Differ from the UK
How Indian transfer pricing applies to an Indian subsidiary of a UK group: arm's length pricing, Form 48, documentation, methods, safe harbours, audits and how it differs from the UK regime.
Read the guide →Hiring in India as a UK Employer: How Indian Employment Differs, and What to Put in the Contract
How a UK company should hire in India through its subsidiary: contracts, provident fund, ESI, gratuity, the labour codes, payroll, and how to extend share plans to Indian employees.
Read the guide →Data Protection for a UK Group with an Indian Subsidiary: UK GDPR Transfers and India's DPDP Act
How a UK company moves personal data to and from an Indian subsidiary: UK GDPR transfer rules, India's Digital Personal Data Protection Act and Rules, timelines, and practical contract terms.
Read the guide →Sources
Last updated 19 October 2026. General information only, not legal or tax advice. Indian and UK rules change often; confirm current requirements before acting.