Calling it a historic recognition, Trump said he is the first US President to receive such an honour in India.
The Telangana government has named a road adjoining the US Consulate in Hyderabad as "Donald Trump Avenue."
"The new Donald Trump Avenue in Hyderabad, India — The first U.S. President to ever be honored in this way. Thank you! President DONALD J. TRUMP," Trump wrote on Instagram.
The road is located near Hyderabad's technology hub, home to the Indian campuses of several major American companies, including Microsoft, Google and Amazon.
Trump has never visited Hyderabad during either of his terms as President.
The development comes shortly after Indian Prime Minister Narendra Modi and US President Donald Trump met on the sidelines of the G7 Summit in France, where the two leaders agreed to accelerate negotiations on a bilateral trade agreement.
Telangana, one of India's leading information technology hubs, is currently governed by the Congress party, the principal opposition to the Bharatiya Janata Party (BJP) at the national level.