A blemish outside prison up in Indian city (8)
I believe the answer is:
amritsar
'indian city' is the definition.
(I've seen this before)
'a blemish outside prison up' is the wordplay.
'blemish' becomes 'mar' (I've seen this before).
'outside' is an insertion indicator.
'prison up' becomes 'rits' (I am not sure about this - if you are sure you should believe this answer much more).
'mar' enclosing 'rits' is 'mritsar'.
'a'+'mritsar'='AMRITSAR'
'in' acts as a link.
Can you help me to learn more?
(Other definitions for amritsar that I've seen before include "Holy city of Sikhism" , "Site of the Sikh Golden Temple" , "Site of the Sikhs' Golden Temple" , "Indian city, centre of the Sikh faith" , "Eastern city" .)