Telangana as a Business Destination
Telangana has emerged as one of India's most dynamic business destinations, recording a GSDP of INR 18 lakh crore at current prices in 2025-26 with a growth rate of 10.7% — significantly outpacing the national average of 8%. The state now contributes approximately 5% of India's GDP and ranks 8th among Indian states by economic output.
The services sector dominates at 67.16% of GSVA, driven by Hyderabad's position as India's second-largest IT hub. Between October 2019 and June 2025, Telangana attracted FDI inflows of USD 13.90 billion (INR 1.23 lakh crore), underscoring its strong appeal to international investors. Exports from the state reached USD 19.12 billion in FY25, led by engineering goods, pharmaceuticals, organic chemicals, and electronic goods.
For foreign companies considering India entry, Telangana offers a compelling mix of world-class infrastructure, competitive costs, and proactive government support — particularly through the Telangana Rising Global Summit, which catalysed INR 5.75 lakh crore in investment commitments in 2025. The state's per capita income has been rising steadily, and its young, urban population provides a ready consumer market for B2C companies alongside the talent pipeline that B2B companies need.
Telangana's government has consistently ranked among the top performers in the Department for Promotion of Industry and Internal Trade (DPIIT) ease of doing business assessments. The state's proactive approach to single-window clearances through TS-iPASS and industry-specific policies for IT, pharma, and aerospace make it particularly attractive for automatic route FDI investments.
Key Cities & Industrial Corridors
Hyderabad is the undisputed economic engine, housing the state's IT, pharma, and aerospace clusters. The city's HITEC City and Gachibowli corridors host Microsoft, Google, Amazon, Meta, Infosys, and hundreds of Global Capability Centres (GCCs). Genome Valley in the northern suburbs is Asia's largest life sciences cluster.
Warangal is emerging as a secondary IT hub with the Warangal IT Hub and its proximity to IIT Hyderabad and NIT Warangal for talent sourcing. Karimnagar, Nizamabad, and Mahbubnagar are being developed as industrial nodes under the state's decentralised growth strategy.
The Hyderabad-Bengaluru Industrial Corridor (HBIC) is a major initiative connecting Telangana and Karnataka, with mega industrial nodes focused on technology and life sciences manufacturing. The Zaheerabad Industrial Smart City and Kodangal Industrial Cluster are further expanding the state's manufacturing capacity beyond Hyderabad.
Foreign companies planning to set up a subsidiary in India can choose from multiple cities based on their sector focus and cost considerations. Hyderabad remains the primary destination for IT and pharma, but satellite cities like Warangal, Karimnagar, and Nizamabad are gaining traction for BPO, data entry, and regional manufacturing operations with significantly lower operating costs.
The state government's Telangana State Industrial Infrastructure Corporation (TSIIC) develops and manages industrial parks, clusters, and SEZs across all districts, offering ready-built factory sheds, plots, and plug-and-play facilities for manufacturing enterprises. These parks come with assured water, power, and road connectivity, reducing the setup time for new manufacturing units to under three months.
State Tax & Compliance
Telangana's state-level tax and compliance framework includes several key obligations for businesses:
Professional Tax: Governed by the Telangana Professional Tax Act, 1987. The annual liability ranges from INR 1,800 to INR 2,500 per employee, with the maximum capped at INR 2,500/year. Employers must deduct and remit monthly. Payment is due by the 10th of every month for salaried employees.
Stamp Duty: For property transactions in urban areas (GHMC and municipalities), the effective rate is 6% (4% stamp duty + 0.5% registration + 1.5% transfer duty). Rural areas attract 7.5% (5.5% + 2%). Lease deeds attract duty ranging from 0.4% to 15% depending on tenure, with registration at 0.1%.
Labour Welfare Fund: Under the Telangana Labour Welfare Fund Act, 1987, establishments with 5 or more workers must contribute annually. Returns must be filed by 31 January. The Board provides financial assistance up to INR 20,000 for medical treatments.
GST Registration: Standard GST compliance applies as per central rules, with Telangana's state GST administered through the Commercial Taxes Department.
Shop & Establishment Registration: Mandatory under the Telangana Shops and Establishments Act for all commercial premises.
State Startup & Investment Policy
Telangana operates one of India's most comprehensive startup support ecosystems:
T-Fund: A state-backed venture fund that invests in promising early-stage startups through equity, equity-linked instruments, and compulsory convertible debt instruments across technology and innovation sectors.
T-Spark: Launched by the Telangana Innovation Cell, this programme provides funding and grant support for seed-stage startups to accelerate prototype building, talent development, R&D, and marketing.
Financial Incentives:
- 15% capital investment subsidy (up to INR 20 lakh) for manufacturing and service startups
- 100% SGST reimbursement for 5 years for Micro & Small Enterprises
- Interest subsidy of up to 9% per annum on term loans for 5 years
- 100% stamp duty & registration exemption + up to 25% land rebate (max INR 10 lakh)
- Recruitment incentive of INR 10,000 per local hire
- Marketing assistance: 30% reimbursement on global marketing costs (up to INR 5 lakh)
Women-led startups can access WE-Hub grants for mentorship and working capital. For companies seeking DPIIT Startup India registration, Telangana's T-Hub (India's largest incubator) provides comprehensive support.
Land & Real Estate
Telangana offers a range of commercial real estate options at competitive rates compared to Mumbai and Bengaluru:
Grade A Office Space: Average rents in Hyderabad stood at INR 72-95 per sq ft/month in 2025, with HITEC City commanding INR 72-80/sq ft and premium transactions reaching INR 96/sq ft. The city's Grade A office stock has grown to 123 million sq ft.
IT Parks & SEZs: Telangana has 53+ technology parks in Hyderabad alone. Key SEZ clusters include:
- HITEC City SEZ — Headquarters of Microsoft, Google, Amazon India
- WaveRock SEZ (Nanakramguda) — Largest IT SEZ with world-class infrastructure
- DLF Info City SEZ (Gachibowli) — Major GCC hub
- Wipro SEZ (Ranga Reddy), L&T Phoenix Infoparks SEZ
- Tech Mahindra SEZ (Bahadurpally), Lanco Hills Technology Park SEZ
Coworking & Managed Offices: The coworking segment has grown rapidly in Hyderabad, with operators like WeWork, Awfis, CoWrks, and 91springboard offering flexible office solutions starting at INR 6,000-15,000/seat/month. Managed office spaces — fully furnished and customised for enterprise clients — are available from INR 40-65/sq ft/month, offering a cost-effective alternative to traditional leases for companies in the early stages of their India operations.
Companies registering a private limited company in Telangana can leverage SEZ benefits including income tax holidays, duty-free imports, and streamlined customs procedures under India's SEZ framework. For companies that prefer not to set up a full subsidiary initially, Telangana also supports liaison office and branch office registrations with relatively fast processing times.
Labour & Employment Rules
Telangana follows central labour legislation with state-specific variations:
Shops & Establishments Act: All commercial establishments must register under the Telangana Shops and Establishments Act. Working hours are capped at 9 hours/day and 48 hours/week. Overtime is payable at twice the ordinary rate.
Industrial Disputes: Establishments with 100+ workers require government permission for layoffs, retrenchment, or closure.
Contract Labour: Contractors employing 20+ workers must be licensed under the Contract Labour (Regulation and Abolition) Act.
Employee Provident Fund: Mandatory EPF contributions at 12% each from employer and employee for establishments with 20+ employees.
ESI (Employee State Insurance): Applicable for establishments with 10+ employees where wages do not exceed INR 21,000/month.
Gig Workers Bill 2025: Telangana has approved the Gig and Platform Workers (Registration, Social Security and Welfare) Bill 2025, making it one of the first states to provide formal protections for gig workers — a progressive step relevant to tech companies hiring platform-based talent.
Minimum Wages: Telangana revises minimum wages periodically for different categories of workers. As of 2025-26, minimum wages for unskilled workers range from approximately INR 13,000-15,000/month depending on the industry and zone. Skilled workers in IT and manufacturing command significantly higher minimum wages. The state follows a zone-based system with separate rates for Hyderabad, other urban areas, and rural zones.
Gratuity: The Payment of Gratuity Act applies to all establishments with 10+ employees. Employees completing five years of continuous service are entitled to 15 days wages for each completed year. The current maximum gratuity limit is INR 25 lakh.
Companies managing payroll in India should factor in these state-specific requirements alongside central labour code provisions.
Infrastructure
Telangana's infrastructure is rapidly expanding across all dimensions:
Airports: Rajiv Gandhi International Airport (RGIA) in Hyderabad is a major international hub with direct connections to the US, UK, Middle East, and Southeast Asia. The state has proposed four new airports at Peddapalli, Mahbubnagar, Nizamabad, and Kothagudem to boost regional connectivity.
Metro: Hyderabad Metro (operational since 2017) covers 69 km across three corridors. Phase II will add 67 km with five new corridors, including a 31 km Airport Express Line connecting Raidurg to RGIA through Gachibowli and the Outer Ring Road — expected completion by 2028-30 at a cost of INR 17,000 crore.
Rail: Railway projects worth INR 42,219 crore are underway, including line doubling/tripling, full electrification, and station upgrades. The planned 8-Track Railway Infrastructure Project will connect all 33 districts through freight-specific corridors.
Port Connectivity: A 350 km Coastal Connector is planned to link Hyderabad's industrial zones to the ports of Kakinada and Visakhapatnam for faster sea-based exports.
Power: Telangana provides 24/7 industrial power supply with one of the lowest commercial tariffs in southern India. The state has invested heavily in renewable energy capacity and provides uninterrupted power to all industrial estates and IT parks — a critical advantage for data centres and 24/7 operations.
Digital Infrastructure: Hyderabad is a major internet exchange hub with multiple undersea cable landing points accessible via Chennai. The city has one of India's highest fibre-optic penetration rates, supporting high-speed connectivity for IT and BPO operations. Several hyperscale data centres operated by AWS, Microsoft Azure, and Google Cloud are located in and around Hyderabad, making it an ideal location for cloud-dependent businesses.
Frequently Asked Questions
What is the cost of setting up a company in Telangana?
The cost of setting up a foreign subsidiary in Telangana typically ranges from INR 1.5-3 lakh for registration, plus office lease deposits and compliance setup. Grade A office space in Hyderabad costs INR 50-95/sq ft/month, which is 30-40% lower than Bengaluru or Mumbai. Government fees for company incorporation are the same across India, but Telangana offers stamp duty exemptions for eligible startups.
Is Hyderabad better than Bengaluru for IT companies?
Hyderabad offers 30-40% lower office rents (INR 72-95/sq ft vs INR 100-140/sq ft in Bengaluru), a growing talent pool of 3.5M+ IT professionals, and comparable infrastructure through HITEC City and Gachibowli. However, Bengaluru has a larger startup ecosystem. Many multinationals now operate in both cities. Telangana's proactive IT policy and faster shop establishment registrations are additional advantages.
What taxes does a foreign company pay in Telangana?
Foreign subsidiaries in Telangana are subject to central corporate tax at 25.17% (under the concessional regime), GST at applicable rates, professional tax of up to INR 2,500/year per employee, and stamp duty on property transactions. There is no state-level income tax. Companies can access concessional corporate tax rates and DTAA benefits to optimise their tax burden.
Which sectors are most attractive for FDI in Telangana?
IT/ITeS (largest GCC hub after Bengaluru), pharmaceuticals and life sciences (Genome Valley is Asia's largest bio-cluster), aerospace and defence (HAL, DRDO, Tata Advanced Systems), and electronics manufacturing are the top FDI-attracting sectors. The state also has growing fintech, EV, and clean energy ecosystems.
How long does it take to set up a company in Hyderabad?
A private limited company can be incorporated in 7-10 business days through the MCA portal. The full operational setup — including GST registration, bank account opening, and shop establishment licence — typically takes 4-6 weeks with professional assistance. Telangana's TS-iPASS single-window system provides industrial approvals within 15 days.
Does Telangana have a single-window clearance system?
Yes, Telangana's TS-iPASS (Industrial Project Approval and Self-Certification System) provides time-bound industrial clearances. Large projects receive approvals within 15 days and medium projects within 10 days — one of the fastest in India. This applies to manufacturing, IT, and commercial project approvals.
What are the SEZ benefits available in Telangana?
Companies operating in Telangana's SEZs can avail 100% income tax exemption on export profits for the first 5 years, 50% for the next 5 years, and 50% of reinvested profits for another 5 years. Additional benefits include duty-free imports, exemption from minimum alternate tax, and no customs duty on inter-unit transfers within the SEZ.