Legal structuring for US enterprises building global capability centres in India.
A global capability centre (GCC) is one of the most common reasons American enterprises establish in India, and it raises a distinct legal agenda: the entity and FDI structure, the assignment of intellectual property created in India to the American parent, transfer pricing on the cost-plus service fee, employment at scale, and data protection under the Digital Personal Data Protection Act 2023. Getting the IP and transfer-pricing architecture right at inception avoids disputes and restructuring later.
AMLEGALS structures GCCs on a wholly owned subsidiary, build-operate-transfer or managed-services basis depending on the American group’s risk appetite and timeline. We draft the master services and IP-assignment agreements, align the transfer-pricing documentation with the functions actually performed in India, and put in place DPDPA-compliant data-processing terms where the centre handles personal data for group entities abroad.
Choosing between a wholly owned subsidiary, build-operate-transfer and managed-services models against control, timeline and transfer-pricing objectives.
Ensuring all intellectual property created by the India centre vests in or is assigned to the American parent through enforceable assignment and work-for-hire terms.
Structuring the cost-plus service fee and documentation so the India functions, assets and risks match the transfer-pricing position.
Putting in place employment contracts, policies and the labour-code compliance framework for a scaling India workforce.
Building DPDPA-compliant data-processing terms and security safeguards where the centre handles personal data for group entities.
Structuring secondments and management so that the arrangement does not create a permanent establishment of the American parent in India.
Most American groups establish the GCC as a wholly owned subsidiary (private limited company) and operate it on a cost-plus services model. A build-operate-transfer model is used where the group wants a provider to stand up the centre before taking it in-house. The structure is driven by control, speed, transfer pricing and the eventual ownership of the India-created IP.
Indian law does not automatically vest all employee-created IP in the employer for every category of work, so the ownership must be secured by contract. AMLEGALS uses employment terms and an IP-assignment agreement between the India entity and the American parent so that inventions, code and works created in India are owned by the group without ambiguity.
A captive GCC is typically remunerated on a cost-plus basis and taxed on that margin in India. The margin must be supported by transfer-pricing documentation and benchmarking, and an Advance Pricing Agreement can be used to obtain certainty. Incorrect characterisation of the functions can expose the American parent to a permanent-establishment and attribution claim.
It can, if the India centre is found to conclude contracts for or carry on the core business of the parent, or if seconded expatriates are treated as the parent’s employees performing its business in India. AMLEGALS structures the services agreement, secondments and decision-making to keep the centre a service provider rather than a permanent establishment.
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