Tamil Nadu Announces A 'PLI Like' Scheme, But For Global Capability Centres

In the 2023-24 budget, the Tamil Nadu government on 19 February announced payroll subsidies for jobs in new Global Capability Centres (GCCs) with pay exceeding Rs 1 lakh per month.

The subsidy would be 30 per cent in the first year, followed by 20 per cent in the second year and 10 per cent in the third year.

This, according to the government, would make the state attractive to companies looking to set up GCCs in the country, that would house functions like design, research, product prototyping, and testing.

This first-of-its-kind announcement, is being seen as one resembling the Production Linked Incentive (PLI) scheme launched by the central government.

But first lets understand what are GCCs and why attracting them is a big deal.

According to a report by JLL, GCCs, which multinational corporations earlier set up to shift back-office processes offshore in order to take advantage of lower costs, have now grown into centres for product development and innovation, thus creating high-paying jobs for people in a variety of fields, i.e., from tech to finance and analytics.

There are about 1800 GCCs in the country, with the number only expected to grow in the coming years.

Among the benefits of GCCs are good employment opportunities that could reduce brain drain, contribution to the GDP, knowledge transfers and increase in Foreign Direct Investment (FDI).

Similar to the subsidies announced in the budget for GCCs, the PLI scheme tries to boost investment and employment by incentivising companies to increase sales and production.

Several sectors such as the manufacturing of mobiles, electrical components, and medical devices are covered under it.

The only difference is that while capability centres are in the service sector, the PLI scheme is for the manufacturing sector.

While it is to be seen as to how this plays out over the years, it is a good step and would give companies one more reason, apart from existing incentives and the state's large talent pool, to consider choosing Tamil Nadu as the venue for their new GCCs.