A US company choosing where to set up in India is choosing two things at once: a state, which decides stamp duty, shops and establishments rules, professional tax, incentives and the registrar's jurisdiction, and a city, which decides talent, attrition, cost and quality of life. The state of the registered office is fixed in the incorporation filing and can be changed later only by a formal shift. The best answer starts with the function. Engineering and product teams look at Bengaluru, Hyderabad, Pune and Chennai; finance, shared services and operations look at Hyderabad, Pune, Chennai and Delhi NCR; sales and market-facing teams look at Mumbai and Delhi NCR; and financial services and international finance units look at GIFT City. This page offers a framework and a first comparison that your own search for people should test.
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Key facts
| State decides | Stamp duty, shops and establishments act, professional tax, labour welfare fund, incentives and registrar |
|---|---|
| City decides | Talent pool, attrition, rent, commute and the cost of hiring |
| Registered office | Stated in the incorporation form; moving between states needs a formal procedure |
| Common engineering hubs | Bengaluru, Hyderabad, Pune, Chennai |
| Common operations hubs | Hyderabad, Pune, Chennai, Delhi NCR (Gurugram and Noida) |
| Finance hub | Mumbai; GIFT City for international financial services |
| Incentives | State policies change; verify current terms; do not choose on a subsidy alone |
| Decision order | Function, talent, leadership location, cost, then incentives |
Start from the function, not the state
Most location decisions go wrong because the question is asked in reverse. A company asks which state has the best incentive and then tries to hire there. The sequence that works is to decide what the team will do, find where people with those skills live and want to work, locate the leader, and only then compare costs and incentives. A centre that cannot hire loses more in a year than any capital subsidy gives back.
A first comparison of the main hubs
| Hub | State | Typically strong for | Points to check |
|---|---|---|---|
| Bengaluru | Karnataka | Software, product, data and AI, start-up ecosystem | Competition for talent and attrition; rent and commute |
| Hyderabad | Telangana | Software, life sciences, shared services, large GCC base | Specific micro-markets; growth of rents |
| Pune | Maharashtra | Engineering, automotive, shared services | Infrastructure of the chosen area |
| Chennai | Tamil Nadu | Manufacturing, automotive, software and shared services | Climate and logistics; state policy terms |
| Gurugram and Noida | Haryana and Uttar Pradesh | Operations, consulting, sales and corporate offices | Two states with different rules even within one metropolitan area |
| Mumbai | Maharashtra | Finance, media, sales and corporate headquarters | Highest rents; commute |
| GIFT City | Gujarat | International financial services and fund activities | Separate regulator and rules; limited scope for non-financial companies |
The table is a starting map and not a ranking. Each hub has sub-markets with different rents and talent, and conditions shift as companies move. Visit at least two before deciding, and speak to recruiters who will say how long a given role takes to fill.
What the state changes
- Stamp duty on the Memorandum and Articles of Association and on leases and agreements varies by state and, for the charter, by authorised capital.
- Shops and establishments rules set working hours, holidays, registration and employee records.
- Professional tax and the labour welfare fund apply in some states and not others, with different rates.
- Goods and services tax is registered by state, so a team in a second state needs a second registration if it supplies there.
- Incentives and land policy differ, and some states offer concessions for specified sectors or for centres above a headcount threshold.
- The registrar's jurisdiction decides which regional office handles your filings.
GIFT City in brief
GIFT City in Gujarat is India's international financial services centre, with its own regulator and a regime designed for financial institutions, fund managers and related activities that deal in foreign currency. It suits banks, insurers, fund and treasury operations and some fintech businesses, and it is not a general location for a US software or manufacturing company. If your business is in financial services, check the current rules and the regulator's authorisation process before deciding. See entity choices for the general options.
One state or several
A first team of ten to thirty people is usually best in one city, with one registered office and one set of registrations. Opening a second city early doubles registrations and splits the culture, so wait until the first site is stable. When a second city is needed for talent or customers, register the second branch or unit with the state authorities and add goods and services tax and payroll registrations in that state. A change of registered office between states later is possible but requires shareholder and regulatory steps, so choose with some care at the start.
Ten questions before you decide
- What will the team do in the first year, and in year three?
- Where do the people with those skills live today?
- Who will lead the centre, and where do they want to be?
- What are the typical times to fill each role in the shortlisted cities?
- What is the all-in cost per desk, including deposits and fit-out?
- How is the commute and what do staff think of the area?
- Which state rules and registrations apply?
- Is there an incentive, and what are its conditions and duration?
- How close are customers, regulators and airports?
- What is the plan if the first site does not work?
Official sources
Check the rules at the primary sources: Income Tax Department (India), Reserve Bank of India, Ministry of Corporate Affairs, Internal Revenue Service (US), Bureau of Industry and Security (US) and the Ministry of External Affairs (India).
Frequently asked questions
Which Indian state is best for a US company?
There is no single best. Choose by function and talent first, then compare cost and state rules.
Can I change the registered office state later?
Yes, but it needs shareholder and regulatory steps, so decide with care at the start.
Which cities are common for engineering teams?
Bengaluru, Hyderabad, Pune and Chennai are common choices.
Which cities suit operations and finance teams?
Hyderabad, Pune, Chennai and Delhi NCR are common, with Mumbai for finance and sales.
Does stamp duty differ by state?
Yes, for the charter documents, leases and many agreements.
Is GIFT City suitable for a software company?
Usually no. It is designed for international financial services.
Should I choose by incentive?
No. Incentives change and carry conditions, and talent availability matters more.
Do I need separate registrations in each state?
Goods and services tax, payroll and shops registrations are state-specific, so a team in a second state needs its own.
How many cities should I start with?
One. Add a second when the first is stable.
Related guides
Setting Up a Global Capability Centre in India as a US Company: Captive, Build-Operate-Transfer and Hybrid Models, Cost-Plus Pricing, State Policies and Key Risks
How a US company builds a captive engineering, finance or operations centre in India: the three delivery models, entity and tax choices, cost-plus transfer pricing and safe harbour questions, permanent establishment, intellectual property, state incentives and a 12-month roadmap.
Read the guide →Incorporation process
The online steps from name approval to the certificate.
Read the guide →Subsidiary, branch, liaison office or LLP
Choosing the right Indian entity.
Read the guide →Hiring and payroll in India
Contracts, statutory benefits and the monthly payroll cycle.
Read the guide →Sources
Last updated 2 November 2026. General information only, not legal or tax advice. Indian and US rules change often; confirm current requirements before acting.