The company, which expects the centre to be operational in the next few months, will focus on localising its products and features for the Indian market through the unit.
"We have always stated that India is one of our most important markets. We are in process of signing the lease on a facility in Bangalore, which will be our R&D unit. This is the first one outside China," Xiaomi India Head Manu Jain said.
Work on the facility is expected to commence by the end of March and in the next few months, it will be operational, he added.
Jain declined however to comment on investment details and the number of people who would work at the R&D centre.
"The R&D unit will focus on India-specific products to begin with. We will focus on localisation, themes and then India specific features to cater to local requirements here," he said.
India is one of the largest markets for Xiaomi outside of China. The company has so far, launched three devices in India — Mi 3, Redmi 1S and Redmi Note. The cumulative sales have crossed a million units since the first launch in July 2014.
The company launched its latest device - Mi 4 - priced at Rs 19,999 in the Indian market, in partnership with eCommerce firm Flipkart.