GCCs: Strengthening India’s Digital and Innovation Ecosystem

India’s Global Capability Centers (GCCs) have emerged as strategic hubs for enterprise innovation, operational excellence, and digital transformation. The government’s emphasis on developing a national framework for GCCs in Tier-2 cities marks a significant step toward creating a future-ready ecosystem.

Monika Potharkar, Director FSS and Site Lead at General Mills India Center (GIC), believes the budget’s focus on talent development, infrastructure enhancement, and industry collaboration will strengthen India’s position as the preferred destination for GCCs.

“The Union Budget’s emphasis on developing a national framework for Global Capability Centers (GCCs) in emerging Tier-2 cities is a testament to India’s commitment to building a future-ready digital and innovation ecosystem. Strengthening talent pipelines, upgrading infrastructure, and enabling industry collaboration will further position India as the preferred global hub for enterprise innovation and operational excellence.

The measures to streamline international taxation—such as the block-period approach for arm’s length pricing and the expansion of safe harbour rules—will provide greater regulatory clarity, reduce litigation, and enhance ease of doing business.

Additionally, the introduction of a Center of Excellence (CoE) for Artificial Intelligence underlines India’s commitment to developing a scientific temper and accelerating AI-driven transformation.  With these strategic initiatives, India is reinforcing its position as a powerhouse for digital transformation, AI adoption, and global enterprise operations.” Monika shared.

Startups and MSMEs: Fueling Economic Growth and Innovation

For startups and MSMEs, the Union Budget 2025-26 delivers a strong push toward innovation and entrepreneurship. The increased credit guarantee cover, extended tax benefits, and fresh Fund of Funds investment will provide the necessary financial boost for emerging businesses. These measures align with the broader vision of ‘Make in India, Make for the World.’

Ganesh Sonawane, CEO & Co-Founder at Frido, underscores the budget’s role in fostering a conducive environment for startups by sharing, “The Union Budget 2025-26 reaffirms India’s commitment to fostering innovation, entrepreneurship, and economic inclusivity, laying a strong foundation for startups and consumer-driven industries. The increase in credit guarantee cover, extended tax benefits, and fresh Fund of Funds investment will provide much-needed momentum for startups and MSMEs, enabling them to scale and drive domestic consumption. Additionally, the National Manufacturing Mission and export promotion measures will bolster India’s position as a global manufacturing hub, aligning with our vision of ‘Make in India, Make for the World.’

The budget presents both opportunities and challenges for India’s MSME sector. The revised MSME classification—raising investment limits by 2.5 times and doubling turnover thresholds—will significantly improve credit access and support mechanisms, fostering economic expansion. However, concerns around disinvestment and privatisation remain a topic of discussion.

Tarun Singh, Founder and MD at Highbrow Securities, highlights the budget’s impact on MSMEs and broader economic stability. “The Union Budget 2025-26 presents both opportunities and challenges that will shape India’s economic trajectory. As an equity investor in MSME companies, I welcome the government’s renewed focus on this sector. The revised MSME classification—raising investment limits by 2.5 times and doubling turnover thresholds—will significantly improve credit access and support mechanisms, enabling small businesses to drive economic growth.

However, the budget’s heavy reliance on disinvestment and privatisation raises concerns. While privatisation may boost government revenues, it risks job losses and could disrupt long-term growth. Employment stability is crucial, and economic expansion must not come at the cost of job security. Similarly, raising the income tax exemption limit to ₹12 lakh provides relief but lacks alignment with broader growth strategies.

Despite these concerns, the National Manufacturing Mission is a commendable step toward strengthening India’s “Make in India” vision. Prioritising ease of doing business, workforce development, MSME engagement, technological access, and quality production will foster a dynamic manufacturing ecosystem.

The proposed tax reforms promote inclusivity by reducing compliance burdens. Lowering TDS thresholds and extending tax return timelines benefit small businesses, startups, and those with variable incomes. Simplifying tax laws and encouraging voluntary compliance will create a more transparent and equitable system.”

Hospitality: Boosting Tourism and Economic Prosperity

Recognizing the hospitality sector’s vital role in economic growth, the government has prioritized investments in travel infrastructure and connectivity. These measures are expected to drive higher domestic tourism and boost businesses across hotels, restaurants, and allied services.

Aji Nair, CEO at Mirah Hospitality, highlights the budget’s impact on tourism-driven economic development. : “The Union Budget 2025 brings a significant boost to India’s tourism and hospitality sector. The government’s focus on improving travel infrastructure and connectivity to key destinations will enhance domestic tourism, strengthening local economies and directly benefiting restaurants, hotels, and allied services.

With enhanced accessibility and upgraded facilities, we anticipate a surge in visitor footfalls, which will be instrumental in uplifting local communities while showcasing India’s rich culinary and cultural diversity. Additionally, the new tax regime aimed at reducing the middle-class tax burden is expected to boost disposable income, fueling consumption spends across sectors.

By prioritizing tourism-driven development, this budget lays the foundation for a thriving hospitality ecosystem. As the industry adapts to evolving consumer preferences, we are excited to contribute to this journey of transformation and growth.”

The Union Budget 2025-26 has laid down a comprehensive roadmap for economic growth by addressing key concerns across industries. As these initiatives take shape, India is poised to strengthen its leadership across digital transformation, entrepreneurial expansion, and global trade.