Intel is expanding its facilities in Bangalore to include a new campus that will cost $41m (£25m).
The campus will house employees involved in hardware and software design, validation and system engineering for the next generation of Intel's microprocessors, semiconductors and memory technologies.
The facility is expected to house more than 1,000 engineers initially.
"India continues to play an important role in helping Intel to deliver architectural innovation to our customers by extending our silicon leadership," said Ketan Sampat, president of Intel Technology India in Bangalore.
The announcement by Intel is in line with its strategy to significantly enhance its investment and head count in research and development in India.
During his visit to India in August last year, Intel chief executive officer Craig Barrett announced that the company planned a major expansion of its research and development efforts in India, and would increase the number of employees it has in the country from 1,000 to about 3,000 over the next few years.
The investment would cost about $100m (£62m), and most of the new recruits would be for Intel's Bangalore development centre, Barrett said then.
Intel's development centre in Bangalore is already working on Xeon processors, and last month the company announced that the centre will also be involved in developing the next generation of Intel's mobile Centrino platform. The centre develops embedded software such as device drivers and chipsets for the Centrino.
A number of multinational semiconductor companies including Texas Instruments have announced plans to increase the size and role of their centres in India.