Swaminomics: Narendra Modi's biggest achievement which is the secret behind India's growing power

Ronit Kawale
Ronit Kawale - Senior Editor
7 Min Read

Author: Swaminathan S. Anklesaria Iyer

What has been India's biggest economic achievement in the 10 years under Narendra Modi? My answer is the unexpected but unprecedented rise of the Global Capability Centre (GCC) of multinational companies. This has quietly but with astonishing effect made India a global hub of intellectual power. According to a recent study by Pune-based consultancy Wisematic, 3.2 million Indians now work in the GCC, most of them engineers and scientists. They are estimated to generate a total revenue of $121 billion, of which $102 billion is export earnings. This makes the GCC one of India's largest regions, as well as a keeper of the balance of payments.

India's merchandise exports stood at $437 billion in 2023-24 and the trade deficit in goods stood at $240 billion. But the $162 billion trade surplus in services (to which the GCC contributes) is certainly a big relief.

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Yet, ironically, the credit for this goes to government policies. It is the result of globalization, of international forces, that have created technical jobs around the world. These jobs are mostly created where the brain is, i.e. intelligence. This is brain power.

Western countries do not produce enough STEM (science, technology, engineering, mathematics) graduates to meet their needs. India is the only country in the world other than China that produces an estimated 2.3 million STEM graduates every year, of which 500,000 are engineers. They were once considered inferior but now multinational companies have grown increasingly dependent on them.

A new Cold War has broken out, which has seriously affected global goods trade. But it has had no effect on the rise of the GCC.

Initially, GCCs were said to be captives of MNCs. At that time, they used to perform simple functions like call centre operations and back-office work. As India's skills developed, GCCs moved up the value chain into business process operations and software for their parent companies. Now, they have moved forward to become a global MNC hub for research and development, design and artificial intelligence.

They constitute financial black boxes because they do not have separate balance sheets. Multinationals often want to downplay their Indian operations because they fear being accused of exporting jobs. For example, when IBM realised that the number of its employees in India was too high, it stopped giving country-wise numbers of its employees. Accenture, the world's top consultancy firm, said a few years ago that of its 7 lakh employees worldwide, 3 lakh were in India, a staggering ratio.

The GCC's meteoric growth was first revealed in a 2021 NASSCOM-Deloitte report. It said that employment in the GCC grew by 75% to 1.3 million between 2015 and 2020. The GCC population grew to over 1,400 during this period. GCC revenues grew to $33.8 billion.

In addition, the GCC provided many indirect benefits through maintenance, transportation, suppliers and other linkages. NASSCOM-Deloitte estimated that gross output for all in 2019-20 was $99-103 billion, employment was 52 to 55 lakh and tax payments were $4-5 billion.

Top engineering multinationals now depend on India for intellectual capacity. Reports at the time estimated that at least 42% of GCC employees were engaged in engineering research and development. General Electric, Volkswagen and Mercedes were all using India for engineering research and development.

But engineering is now only a small part of the story. The MNC list includes global retailers such as Target and Tesco. Global pharma companies are extremely concerned about patent leaks and have been slow to get involved, but Roche has a presence.

Starting with only in-house software, many GCCs started producing Software as a Service (SaaS), which is a major revenue generator. But the fastest growth now is in AI. All the top companies are now using India as a base for AI design and development.

Much is being said about the retreat of globalisation. A new Cold War has broken out, which has seriously affected global goods trade. But this has had no effect on the rise of the GCC. The globalisation of intellectual power is proceeding rapidly.

The government will say it has facilitated. However, multinationals still complain that India is a tough place to do business. In fact, the biggest initiative of the government has been 'Aatmanirbhar Bharat'. By definition, this is the exact opposite of the spirit of globalisation. The highlight of Aatmanirbhar Bharat has been the production-linked incentive (PLI) to accelerate international and domestic investment in 14 key sectors. However, so far, Apple is the only big company to join it. By the way, silicon fabrication plants are also coming. Out of the $26 billion PLI budget, only $1 billion has been disbursed so far.

The Deloitte Technology Trends 2024 report on India's GCCs tells the story of India's growth and global dominance. It is estimated that by 2030 it will cross $100 billion, led by the emergence of about 2,500 more GCCs. This will provide employment to over 45 lakh people. No other economic achievement in the Modi era can compare to the rapid growth of GCCs. Globalisation has proven to be more successful than self-reliance.

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