Magento2 – How to Limit Country Drop Down Input Field

The main challenge comes from the assumption that valid countries to display are the same regardless of context, as both billing and shipping info blocks populate the country list from the same method in Mage_Checkout_Block_Onepage_Abstract:

public function getCountryOptions()
{
    $options    = false;
    $useCache   = Mage::app()->useCache('config');
    if ($useCache) {
        $cacheId    = 'DIRECTORY_COUNTRY_SELECT_STORE_' . Mage::app()->getStore()->getCode();
        $cacheTags  = array('config');
        if ($optionsCache = Mage::app()->loadCache($cacheId)) {
            $options = unserialize($optionsCache);
        }
    }

    if ($options == false) {
        $options = $this->getCountryCollection()->toOptionArray();
        if ($useCache) {
            Mage::app()->saveCache(serialize($options), $cacheId, $cacheTags);
        }
    }
    return $options;
}

If you are using configuration caching (which you absolutely should be doing), once this list is retrieved once the results are cached and will be used until the cache is cleared. Billing step happens first, so you can't filter this way. You'll need to handle caching and the custom collection by rewriting Mage_Checkout_Block_Onepage_Shipping.

First, the collection. You need to create a new method and property, e.g. getShippingCountryCollection(), similar to getCountryCollection(), which has your filters:

public function getShippingCountryCollection()
{
    if (!$this->_shippingCountryCollection) {
        $this->_shippingCountryCollection = Mage::getSingleton('directory/country')->getResourceCollection();
        //your collection filtering here...
        $this->_shippingCountryCollection->loadByStore();
    }
    return $this->_shippingCountryCollection;
}

Second, the caching. set getCountryOptions() to use a different cache ID & the new collection data:

public function getCountryOptions()
{
    $options    = false;
    $useCache   = Mage::app()->useCache('config');
    if ($useCache) {                                  //▾▾▾▾▾▾▾
        $cacheId    = 'DIRECTORY_COUNTRY_SELECT_STORE_SHIPPING_' . Mage::app()->getStore()->getCode();
        $cacheTags  = array('config');
        if ($optionsCache = Mage::app()->loadCache($cacheId)) {
            $options = unserialize($optionsCache);
        }
    }

    if ($options == false) {
        $options = $this->getShippingCountryCollection()->toOptionArray();
        if ($useCache) {
            Mage::app()->saveCache(serialize($options), $cacheId, $cacheTags);
        }
    }
    return $options;
}

If you want to make this more user-friendly, you should do a similar thing with Mage_Customer_Block_Address_Edit::getCountryHtmlSelect() and ::getCountryCollection() so that users cannot create shipping addresses with the disallowed countries.

You can achieve this from admin panel. There is no need of writing any code.

Go to Admin Panel :

Stores->Configuration->Sales->tax->Default Tax Destination Calculation.

There you can select whatever countries or state you want to be showed.