Incentives Alone Will Not Bring Multinationals to a State
Over the past year, UnearthIQ has had several conversations with state bureaucrats, state IT and industry departments, office space providers, enablers, and consulting firms about one central question: how can a state attract more global capability centers (GCCs)?
In this pursuit, nine states in India now have a GCC policy in place, with a tenth, Telangana, under development. Yet, both states with a policy and states without one come back with the same questions. How can you bring us a lead or a new GCC? How can we attract GCCs in other cities to expand in our state? How can you help us land a logo we can showcase? Or how can we take GCCs, and the jobs that come with them, to our tier 2 cities?
It is easy to see why these questions keep coming up. GCCs are the fastest-growing segment in India’s technology landscape today. Between January 2025 and September 2026, India has 197 first-time GCC entrants (greenfield) and 292 expansions by existing GCCs (brownfield). The new entrants of 2026 alone have generated an estimated $2.5 to $2.8 billion in revenue and 70,000 to 75,000 jobs. States want to attract both greenfield and brownfield GCCs as they bring employment.
To win these centers, most state policies so far have focused on incentives and benefits. That is a reasonable starting point, but it raises a few questions. Should so much taxpayers’ money be directed towards attracting these centers? Do incentives really matter to a multinational company? And what is the most effective way to bring one to a state? Answering these questions means looking at what drives a multinational’s location choice, and what states can do beyond incentives.
A policy alone does not decide where a multinational goes
The clearest way to see this is to look at two of India’s leading GCC destinations and how differently they got there. Neither owes its position to incentives alone.
Telangana does not yet have a GCC policy in place, yet Hyderabad continues to attract a steady stream of GCCs, both first-India centers and second- or third-tier centers. Two factors stand out –
The first is the quality of its infrastructure. Hyderabad has well-built technology districts that bring offices, talent, and supporting services together in one place, and good roads connecting them make daily commutes easier for employees. The city is also easy to reach: getting from the airport to its main technology clusters takes just 30 to 45 minutes, which matters because leaders from headquarters visit their India centers often, and short, easy travel makes a city simpler to work with.
The second is cultural fit. English is widely spoken, which is what a global company needs, but Hindi is widely spoken too, and that helps the city attract talent from outside the state as well as senior leaders. Because Hyderabad did not have homegrown talent for many skills, many of the leaders running centers there have moved in from Bengaluru, Pune, Delhi, Gurgaon and other regions, and a shared language makes it easier for them to settle in, something that has been harder in some other cities, such as Chennai
Karnataka’s strengths, by contrast, took shape over a much longer period. Its story goes back to 1984, when Texas Instruments chose Bengaluru for its R&D center, one of the first multinationals to do so in India. Since then, Bengaluru has built:
One of the world’s largest unicorn ecosystems, which brings deep domain and technology product knowledge
India’s largest IT services and electronics ecosystem
The country’s largest software product GCC ecosystem, with companies such as SAP, Oracle, Microsoft, Intuit, Cisco and Adobe, and SAP’s expansion last year again chose the city for the strength of that ecosystem
More than 1,100 GCCs, the only Indian city at that scale, spanning sectors from retail and FMCG to manufacturing and semiconductors
A deep venture capital and startup ecosystem
Karnataka’s GCC policy now builds on that foundation.
At the same time, several newer states have launched policies but are yet to see large numbers. That is not a failure in itself, because attracting multinationals is a slow and continuous process, but it shows that benefits alone are not enough. To understand what makes the difference, it helps to look at the decision from the multinational’s side.
What a multinational’s board looks for
When a multinational’s board, technology team, CXO, and senior leadership decide on a country, state, or city for a new center, they weigh a handful of factors. Two of these are must-haves, and they carry the most weight in the decision.
The first is talent depth and capability, and it is the primary reason a location is chosen. A multinational is not just looking for people, but for a deep pool of experience in the specific kind of work it wants to do. This is why a software product company will almost always prefer Bengaluru: its product ecosystem's size and depth are hard to match. Ola’s R&D team, for instance, sits in Bengaluru, so a Gojek or a Grab building similar capabilities would naturally look there too. Similarly, Anthropic, Microsoft, and SAP have all chosen Bengaluru for deep domain R&D.
The second must-have is infrastructure quality and cost, and infrastructure here means much more than a good airport. It covers:
Quality of offices, since senior leaders from headquarters visit their India centers every year
The extended ecosystem a center relies on, from recruitment firms to compliance and audit partners.
Quality of lifestyle, from housing to restaurants and breweries, because people have to live and work there
Once these two are in place, three more factors come into play.
The third is cost, although at the country level it is largely a given. Moving work from the US or UK to India already makes it 2.5 to 3 times cheaper, even if the gap is no longer the 4 times it once was. Cost really comes into play within India, as companies compare talent and real estate costs from one state to another.
The fourth is the quality of leadership available in a region, that is, how many CEOs, country heads, and senior leaders already live and work there. A center needs experienced middle and top management to run and grow it, and this is where tier 2 cities often miss out. A Starbucks or a Walgreens, for example, could have chosen Coimbatore, but chose Chennai instead, because the leaders needed for product, procurement, and supply chain functions still live in tier 1 cities.
The fifth is ease of setup and running a center: how quickly a center can be established in a region, and how simple it is to manage compliance once it is operating. Incentives also sit within this factor. They matter, but they rarely decide the outcome.
Seen from the multinational’s side, it becomes clear why incentives carry limited weight. In most cases, a multinational setting up a center already has the funds, and India’s cost advantage comes by default. Setting up has also become easier, with flexible workspace providers, recruiters and enablers readily available. Offering incentives to both new entrants and existing centers expanding from other states therefore adds up to a large bill for the state, for help most multinationals do not need.
While much of this is a given, states can still do a great deal to attract a multinational. Here is where they can focus.
What states can do
Treat greenfield and brownfield as two separate strategies
Greenfield centers (a first India office) are the medium-term prize, typically taking 12 to 24 months from a board decision to an operating center. They have to be won in the source country.
Brownfield centers (a second or third India office) are the fastest wins, typically taking 6 to 12 months because the parent company already knows India. They can be won within India, from mature centers looking to spread risk, tap new talent pools or set up sector-specific centers.
Take the state’s story to the market
Instead of waiting for proposals, run country-specific roadshows matched to each market’s strengths, such as BFSI from the UK or automotive and electronics from Japan and Korea.
Research target companies before each roadshow, host closed-door roundtables and one-on-one meetings with boards and CXOs, and track every lead for at least 90 days afterwards.
Build a clear state value proposition, benchmarked honestly against peer states, so the state knows where it wins and where it needs to compensate.
Make it easy and fast to set up and operate
Offer a single window for all state-level licenses, and bring the Shops and Establishments, professional tax and GST registrations together into one license.
Set a fixed timeline for screening applications, and offer a helpdesk that supports companies on incorporation, transfer pricing, cost models and setup structures.
Reduce the recurring compliances within the state’s control.
Appoint a dedicated point of contact in government, such as a chief relationship officer. One state has already done this successfully.
Work with workspace providers so that ready-to-use space can cut occupancy time from 12 to 18 months to 4 to 8 weeks, and make room for small pilot centers that let companies test the state before committing to a larger one.
Keep expanding the talent pool and build an innovation ecosystem
Bring multinationals, startups and academia together to work on real problems, as the NASSCOM Center of Excellence for IoT and AI in Bengaluru and T-Hub in Hyderabad do.
Set up funds with contributions from GCCs, institutes and government to give startups access to innovation projects they would otherwise rarely reach.
Link universities with GCCs so the talent pipeline grows locally.
Build and keep improving infrastructure
Develop well-planned technology hubs with quality office space, strong road connectivity, public transport and easy airport access.
Invest in housing, schools, healthcare and lifestyle, and keep upgrading as demand grows.
Develop tier 2 hubs around a clear capability
Each hub should be clear about the specific capability it is selling, rather than marketing itself as a general destination. Several states are already designating tier 2 focus nodes, such as Coimbatore, Madurai and Trichy in Tamil Nadu, and Indore and Bhopal in Madhya Pradesh.
Close the leadership gap by clustering centers and startups and by improving quality of life, so senior leaders are willing to relocate.
Measure outcomes, not announcements
Publish a dashboard that tracks MoUs signed, groundbreakings, operational centers, and jobs created, alongside investment attracted against incentives spent.
An MoU is not a center. Tracking the full journey shows where deals stall and shows taxpayers whether incentive spending is paying off.
States do not need to fight a battle of subsidies to attract multinationals. They need to fight a battle to build ecosystems and tell their story to the right boardrooms.
