The ongoing conflict has since dramatically altered India's economic outlook. Given the Indian economy's heavy dependence on energy - in the form of oil, LNG, and LPG - the economy stands to be impacted through multiple channels, including growth, inflation, the balance of payments, and government finances. PM Modi is suggesting people should re-start working back at home and do car pool to save on the petrol cost.

Market analysts suggest that with global crude oil prices hovering at elevated levels of $85–90/bbl in FY26, growth may slip to 6.7% from the earlier projection of over 7%. There will be a second-order impact on inflation through higher raw material costs across several industries - including automotive, FMCG, cement, and plastics - with the Consumer Price Index (CPI) likely inching toward 5%, the Indian rupee likely to depreciate further, and the Balance of Payment worsening.

The conventional belief that a depreciating exchange rate will typically makes India's service exports more competitively priced, also appears to be losing its effect, as concerns over Artificial Intelligence are weighing on the operating profits of IT and services companies. Recent quarterly results of IT majors such as Infosys, TCS and HCLTECH, justify that. For most of the last five years, surpluses from India's service exports were sufficient to offset the deficit incurred from energy imports. But that buffer, too, seems to be eroding.

At a time when most exogenous factors are weighing against India, one element that may help the country navigate the current crisis is the emergence of Global Capability Centres (GCCs) as a strategic bulwark against foreign exchange volatility and fiscal fragility. These hubs—over 1,700 strong, employing 1.9 million professionals, and generating $64 billion in export revenue in FY24—have evolved from back-office operations into innovation powerhouses driving R&D, AI, and fintech for multinational giants like Google, Microsoft, and JPMorgan. GCCs offer India a lifeline: their dollar-denominated revenues provide a steady forex inflow, insulating the rupee from volatility that saw it depreciate 9% against the USD in 2025 alone.

Unlike volatile remittances or trade exposed to tariffs, GCCs' embedded talent pool—fuelled by India's demographic dividend—ensures recession-resistant growth, with projections hitting $110 billion by 2030. By localizing high-value jobs and fostering self-reliance, they not only tide over downturns but reposition India as a geopolitical safe haven, turning global crises into opportunities for economic sovereignty.

On the policy front, there are several endogenous measures that policymakers should undertake to position India as a premier GCC destination.

Talent is the basis of the GCC proposition, and India's demographic dividend is real. But GCC leaders is pointing a mismatch: entry-level graduates are plentiful, but job-ready graduates are scarce. The gap between university curriculum and industry expectations remains wide, particularly in areas such as artificial intelligence, cloud architecture, and advanced analytics.

Equally pressing is the deficit at the top. Most GCCs in India have historically functioned as execution arms, but global mandates are shifting. Boards now want their India centres to lead product development, drive innovation cycles, and own Profit &Loss responsibility. That demands different kinds of mid- and top-level leaders: ones who understand the parent company's strategic context, navigate cross-cultural complexity, and can advocate for the India center in global conversations. Concerted investment by companies like Microsoft and Amazon, combined with deep university partnerships, has produced a talent layer capable of stepping into such roles.

GCCs are no longer importing solutions from headquarters; they are generating intellectual property on Indian soil. This shift is only possible when GCCs are genuinely contribute to the local innovation ecosystem rather than merely reside within it. Bangalore's experience is instructive. The density of startups, deep-tech firms, and research institutions has allowed GCCs to tap into a living laboratory of ideas. Several GCC leaders in India described structured programs through which they co-develop prototypes with local startups, license early-stage technologies, and absorb entrepreneurial talent that would otherwise leave for Silicon Valley.

Government and industry associations must create formal connective tissue between GCCs and the startup ecosystem: grants and joint IP frameworks, that allow co-innovation without the friction of bureaucratic uncertainty. A GCC that merely recruits from the ecosystem will extract value; one that invests in it will multiply value.

Physical infrastructure is neither glamorous nor contentious, yet it repeatedly surfaced as a decisive factor in location decisions. Reliable power, world-class data connectivity, accessible housing for a mobile workforce, and seamless last-mile transport are not luxuries; they are the baseline expectation of any global enterprise evaluating where to plant its flag. Not all cities and towns in India are attracting establishment of GCC. The top six cities, namely, Bengaluru, Hyderabad, Delhi NCR, Mumbai, Pune, and Chennai, together account for around 90–95% of total GCCs. There are lessons to be learnt. The lesson for other aspirant cities is that infrastructure must be developed ahead of demand, not chased behind it. States that wait for GCCs to arrive before building will lose to those that build and invite.

The fourth pillar is where government has the most direct lever to pull. GCC leaders are not primarily seeking tax giveaways; they are seeking predictability. A competitive tax regime matters, but what matters more is the confidence that policy will not change arbitrarily, that interpretations of transfer pricing and GST provisions will be consistent, and that disputes will be resolved through transparent mechanisms rather than litigation.

The recent thrust by Telangana and Karnataka to publish dedicated GCC policies with single-window clearances is a step in the right direction. The next iteration must address nuanced bottlenecks: faster STPI and SEZ approvals for high-value operations, simplified compliance pathways for GCCs engaging contract research, and a coherent national framework that prevents a race to the bottom between states. (IPA Service)