Jha, who has made acclaimed films like "Mrityudand", "Apaharan" and "Gangaajal" based in his home state Bihar, told reporters that he would begin shooting his new movie from January next year.
"A major part of the movie will be shot in Jamshedpur and some parts will be shot in the US," he said, adding that one of the protagonists lives in the US for some time.
So what attracted Jha to the steel city?
"Beautiful bungalows and the picturesque landscape of Jamshedpur. Most part of the movie will be shot within the city," he said.
"Rajneeti" will star Ajay Devgan, Nana Patekar and Shahid Kapoor. Besides, talks are going on with Sunny Deol, Manoj Bajpai, Om Puri, Naseeruddin Shah and Shabana Azmi.
Jha is also negotiating with renowned actresses besides hunting for a new face.
Asked about the storyline, Jha said, "The movie will capture the present day political system and ironies prevailing in the oldest democratic system."
"The Indian democracy functions like a feudal system," he added.