Xiaomi Plans to Have India Smartphone Lineup Produced Locally

Foxconn Technology Group has begun assembling Xiaomi Corp.’s first made-in-India smartphone from a new plant in the country’s south, helping the Chinese company shorten delivery times and prop up margins.

Xiaomi, the world’s fourth-largest phone vendor, will source “100 percent” of Redmi 2 Prime devices sold in India from Foxconn’s new factory in Sri City, Hugo Barra, vice president of global operations, said by phone on Sunday.

The Redmi 2 Prime went on sale online Monday, at 6,999 rupees ($110) for a 2GB model.

“We are starting small; but our eventual aim is to make most of our devices if not all of our devices that are sold in India, manufacture them here,” said Manu Jain, Xiaomi’s India head. “The entire ecosystem needs to exist before we start manufacturing the phone from scratch. This will probably take some time,” he said.

Foxconn had begun production of smartphones at the Sri City factory, a person familiar with the matter said in July. The Taiwanese company, a contract manufacturer for the world’s largest electronics brands including Apple Inc., is looking to expand in the South Asian country amid Prime Minister Narendra Modi’s Make in India campaign aimed at creating jobs and accelerating economic growth.

Assembling locally will help Xiaomi shore up margins and take advantage of tax breaks in its largest market outside of China. As low-end smartphone sales slow in its home country, Xiaomi is depending on other emerging markets for growth.

Smartphone shipments to India leapt 44 percent to 26.5 million units in the second quarter, International Data Corp. said Monday. Chinese brands including Huawei, Lenovo and Xiaomi tripled their shipments off a low base, according to IDC.

Xiaomi wouldn’t say how much it is investing in India manufacturing or its production targets.

“This is hugely important for us,” Barra said. “We reduce the need for inventories to sit in one place.”