How does the state govern cities where much of the economy is informal, on the margins of state regulatory institutions? In this paper, I draw on field research in Mumbai to a present an empirically based conceptualization of the workings of the state in cities like Mumbai, where ‘informality is a mode of urbanisation.’ I draw on the popular Indian notion of ‘jugaad,’ which refers to make shift adaptations, workarounds and improvisation under constraints, to describe the state in Mumbai. ‘Jugaad’ practices and strategies of governance – adaptive, flexible, negotiated and contingent – are routinely applied by state actors at different levels in Mumbai, in spaces “illegible” to formal state institutions. ‘Jugaad’ governance practices are not arbitrary or merely corrupt, but rational, if ad hoc and extra-legal, adaptations around formal rules. These processes embed state actors in local power structures and crosscutting networks that span state, market and political organisations. While they enable the state to apprehend and partially incorporate the city’s informal spaces, they dissipate centralised state power and cohesiveness. The ‘jugaad’ state concept encapsulates how the formal and informal workings of the state interact and shape urban governance in largely informal cities. It draws attention to tensions and disjunctions within the state and in state-society relations in such contexts.