Indians undergoing socioeconomic and lifestyle transitions will be maximally affected by epidemic of type 2 diabetes (T2D). We conducted a two-stage genome-wide association study of T2D in 12,535 Indians, a less explored but high-risk group. We identified a new type 2 diabetes-associated locus at 2q21, with the lead signal being rs6723108 (odds ratio 1.31; P = 3.32 × 10(-9)). Imputation analysis refined the signal to rs998451 (odds ratio 1.56; P = 6.3 × 10(-12)) within TMEM163 that encodes a probable vesicular transporter in nerve terminals. TMEM163 variants also showed association with decreased fasting plasma insulin and homeostatic model assessment of insulin resistance, indicating a plausible effect through impaired insulin secretion. The 2q21 region also harbors RAB3GAP1 and ACMSD; those are involved in neurologic disorders. Forty-nine of 56 previously reported signals showed consistency in direction with similar effect sizes in Indians and previous studies, and 25 of them were also associated (P < 0.05). Known loci and the newly identified 2q21 locus altogether explained 7.65% variance in the risk of T2D in Indians. Our study suggests that common susceptibility variants for T2D are largely the same across populations, but also reveals a population-specific locus and provides further insights into genetic architecture and etiology of T2D.