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Mumbai or nothing! Working elsewhere is a career graveyard. I would even classify Delhi and Bengaluru as tier 1.5 and advise you to avoid them.

Yes, Mumbai is expensive and al that, but your earnings will still be more and πŸ’°πŸ’°πŸ’°is what matters
Option 2 looks too good to be true! I would prefer option 2. T2 city will be a major factor for me. T1 cities just don't offer enough in terms of quality of life etc.
Agree that Mumbai is a tier 1 city, but life sucks if you are not part of the elite. I mean, if you’re gonna live in a tiny flat and drive an Alto, might as well move to a tier 2 city and live on a larger flat, drive a better car.