How to set up a GCC in Hyderabad

1. Choosing the right entity

Almost every global group that builds a capability centre in Hyderabad does so through a wholly owned private limited company incorporated under the Companies Act, 2013. The alternatives exist, but they rarely fit. A liaison office cannot carry on commercial activity and is confined to representation and coordination. A branch office is permitted a narrower band of activities and is generally slower and more supervised. A limited liability partnership is workable in some structures but is a poor fit for a captive that will hire at scale, grant equity-linked incentives or be absorbed into group reporting.

The subsidiary route works because it aligns with everything that follows. It gives the group a clean Indian contracting party for the intercompany services agreement, a payroll and provident-fund employer, a lessee for premises, a registered taxpayer for GST and export refunds, and a corporate vehicle that can later be restructured, merged or carved out without renegotiating the group's entire India footprint. Directors, registered office and statutory records need to be settled at incorporation, including the requirement that at least one director is resident in India.

The entity decision is not really about incorporation. It is about which vehicle can still carry the business three years and four hundred employees later.

2. FDI, FEMA and capital filings

For the activities most GCCs perform - software development, engineering, research, analytics, finance and accounting, customer operations, shared services - foreign investment is generally permitted up to 100% under the automatic route, meaning no prior government approval is required. That makes the question one of process rather than permission, and process is where groups lose time.

Funds must arrive through banking channels with the correct purpose coding, shares must be issued within the prescribed period and priced consistently with the applicable valuation rules, and the inward remittance and allotment must be reported to the Reserve Bank through the authorised dealer bank using the prescribed forms, including Form FC-GPR. An annual return on foreign liabilities and assets follows. Each of these has a deadline, and each missed deadline creates a regularisation exercise that is disproportionate to the underlying error. Sector-specific conditions can also apply, so the activity description in the memorandum should be drafted with the investment position in mind rather than copied from a template.

3. Intercompany contracts and transfer pricing

A captive centre earns nothing from the market. Its entire revenue comes from the parent or affiliates, which makes the intercompany services agreement the most consequential commercial document the entity will sign. It should define the scope of services and service levels, the cost base and the pricing method, invoicing frequency and currency, ownership and assignment of intellectual property, confidentiality and data-protection obligations, limitation of liability, and termination and transition mechanics.

Because the parties are associated enterprises, the pricing is subject to India's transfer-pricing regime. The common approach for captive delivery is a cost-plus mark-up benchmarked against comparable service providers, with contemporaneous documentation supporting the method and the comparables, and an accountant's report where the prescribed thresholds are met. What causes disputes is rarely the mark-up itself; it is the absence of a signed agreement contemporaneous with the work, a cost base that does not match the books, or a functional profile in the documentation that does not match what the centre actually does. Where the centre will own or develop significant IP, the functional analysis and the contractual position need to be settled before development starts, not after.

4. Registrations before day one

The registration list is unglamorous and gates everything. The entity needs a PAN and TAN for income tax and withholding, GST registration in Telangana, registration of the establishment under the Telangana Shops and Establishments Act, professional tax registration, and provident fund and employees' state insurance registrations as employee thresholds are crossed. Export-oriented service delivery adds banking documentation for realising export proceeds and the process for claiming refunds on zero-rated supplies, which is a real cash-flow item for a cost-plus centre paying GST on its input costs.

5. Employment and workforce law

Employment is where imported documents fail most visibly. Indian employment relationships are governed by a combination of central statutes, state rules and judicial interpretation, and several concepts that are standard elsewhere do not translate. At-will termination is not the Indian position. Notice periods, leave entitlements, working hours, overtime, maternity benefit and statutory bonus obligations come from law rather than from the parent's handbook. Broad post-employment non-compete restraints are generally unenforceable, which means protection has to come from confidentiality, non-solicitation and properly drafted IP-assignment clauses instead.

A GCC hiring quickly should settle its templates before the first cohort: offer letter and employment agreement, IP and inventions assignment, confidentiality, code of conduct, an internal complaints committee and policy under the law on prevention of sexual harassment at the workplace, and clear terms for contractors and staffing vendors so that engagement models do not create deemed-employment exposure. Retrofitting these across a few hundred employees after the fact is expensive and never quite complete.

6. Premises, leases and SEZ decisions

Location decisions in HITEC City, Madhapur, Gachibowli and the surrounding technology corridor are usually driven by talent and commute, but the legal terms deserve equal attention. Leases here are commonly long, with lock-in periods, escalation clauses, substantial security deposits, fit-out obligations and reinstatement liabilities on exit. Whether the unit sits inside a special economic zone changes the compliance and tax profile of the operation and the flexibility with which the entity can serve domestic customers later.

Before signing, confirm title and the landlord's authority to lease, register the instrument and pay the correct stamp duty, and align the term and expansion rights with the hiring plan. A lease signed to hit an occupancy date, without an expansion or exit route, tends to become the constraint that shapes the next three years of the centre's growth.

7. Data protection, IP and cyber readiness

A capability centre is, in practice, a data-processing operation. It handles employee personal data in India and, on the parent's instruction, customer and business data that may be subject to the group's obligations elsewhere. The Digital Personal Data Protection Act, 2023 and the Rules notified in November 2025 apply to processing of digital personal data in India, with most operational obligations phasing in through the transition period. Sectoral requirements and CERT-In's incident-reporting directions apply alongside them.

The workable approach is one governance framework for the Indian entity that maps cleanly to the group's: a data inventory covering employee, vendor and delivery data; notices and lawful bases for what the entity processes in its own right; processor terms that reflect what the parent has promised its own customers; retention and deletion schedules; access controls and logging; a rights-request process; and an incident playbook that can produce an accurate first report inside the applicable reporting window. Intellectual property sits in the same conversation: the assignment chain from employee and contractor to the Indian entity, and from the Indian entity to the parent, must be continuous and consistent with the transfer-pricing position.

A delivery centre without its own incident playbook is not covered by the parent's. It simply has not been tested yet.

8. A 90-day launch sequence

The failure mode in GCC launches is parallelism without sequencing. In the first thirty days, focus on what gates everything else: apostilled parent documentation, director identification and digital signatures, name reservation and incorporation, and the start of bank KYC. In days thirty-one to sixty, complete account opening, remit share capital, file the FEMA advance report and FC-GPR, and obtain PAN, TAN, GST and Shops and Establishments registration while the intercompany agreement and transfer-pricing position are finalised.

In days sixty-one to ninety, execute the lease, complete provident fund, employees' state insurance and professional tax registrations, issue the first employment contracts on approved templates, stand up the data-protection and IP controls, and run a short readiness review before delivery begins: is the intercompany agreement signed and dated before the first invoice, are the FEMA filings on record, does every employee contract carry an IP assignment, and can the entity produce a breach report within its reporting window. Those four questions predict most of what a first audit will ask.

9. Mistakes that cost the most

Frequently asked questions