The studio in the southern Indian city of Bangalore, where GM already has a research and development center, will "contribute to the mid-cycle enhancement of existing models and the advanced design of future products," the company said.
"It will give us the ability to design vehicles in India for India to meet the unique needs of our customers across the country," Karl Slym, GM's India head, said in a statement.
The studio, which will initially have about 60 employees, comes at a time when GM is having some success after struggling for years to penetrate the Indian car market.
In the past seven months, the U.S. automaker has sold nearly 2 1/2 times the number of cars it sold in the country in the same period last year, even as overall demand for new cars was slowed by a sharp rise in interest rates.
The company introduced two new compact models earlier this year - the low-cost Chevrolet Spark, which is proving popular among young buyers, and the Chevrolet Aveo U-VA, a premium hatchback.
Previously, the company had focused mostly on sedans, although the Indian market is dominated by compact cars.
The success of Spark is encouraging GM to bring more compact models for Indian roads. Currently, it produces five Chevrolet models at its factory at Halol in western India. The company is investing more than US$300 million (EUR200 million) in a second plant, which is to start production in 2008.
"The opening of the GM India design studio is an important step in GM's growth in this crucial market," Slym said.
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