A shipment of red sandalwood arrives at the Yokohama port in Japan, where workers are shocked to find Pushpa hiding in a container. He attacks them and demands payment for the cargo, but is shot and falls into the sea, setting events back.
After humiliating police officer Bhanwar Singh Shekawat, Pushpa rises to power as a respected smuggler, while Shekawat goes into hiding. Shekawat secretly disguises himself as a labourer and intercepts a huge shipment of sandalwood. Meanwhile, Pushpa meets Andhra Pradesh Chief Minister Narasimha Reddy but is denied a photo opportunity to avoid political backlash. Feeling insulted, Pushpa vows to overthrow the government by making Siddappa the Prime Minister and collect Rs 500 crore from sandalwood smuggling.
Pushpa strikes a deal with Kogatam’s central minister Veera Pratap Reddy and meets international buyer Hameed in Maldives to sell 2,000 tonnes of sandalwood for Rs 5,000 crore. Many smugglers join Pushpa’s gang, but Mangalam Srinu and Dakshayani, along with Shekhawat, plan to sabotage the operation. Shekhawat kills a gang member, causing fear among the others, who urge Pushpa to abandon his leadership of Srinu. However, Pushpa managed to use his tricks and methods to smuggle sandalwood through Chennai to its final destination in Sri Lanka. During the transportation, Shekhawat catches up and shoots all the trucks, forcing the drivers to flee. The media congratulates Shekhawat for the raid, but Srinu realizes that the cargo was not sandalwood but sandra, a wood that resembles red sandalwood but has no market value. Instead, Pushpa made bullock carts with the actual load and transported them to Chennai, with indirect help from Shekwat himself.
Shekawat eventually obtained permission to track the consignment to Rameswaram, but failed to retrieve it before it crossed the Indo-Sri Lankan border. Enraged, he set fire to the storage site, apparently committing suicide in the blaze. Meanwhile, Srivalli discovers that she is pregnant and Pushpa parties. However, tragedy strikes when her niece, Kaveri, is assaulted at a festival and then kidnapped by Pooga Reddy, the nephew of Veera Pratap Reddy. Pushpa saved her and killed Pooga and his gang, along with Subba Reddy, Pooga’s father and Pratap Reddy’s younger brother. He reconciles with his ex-family and performs Kaveri’s wedding, only for a mysterious person to detonate a bomb at the wedding.