China's Xiaomi launched its first India-made phone, the Redmi 2 Prime, and announced a tie-up with Taiwan's Foxconn to make smartphones in the country , giving a huge legup to the government's efforts to boost local manufacturing. Foxconn is expanding its Sri City plant in Andhra Pradesh -where it assembles completely knocked down Xiaomi phones -and expects the additional capacity to be ready by December.
Making in India would result in lower operational costs, increased efficiency and lower-priced smartphones for consumers. It would halve the time taken to get phones to partner warehouses to two weeks. Both cost and time are critical in the price-sensitive and competitive Indian market.
The Redmi 2 Prime is priced at Rs.6,999 and available on the Amazon, Snapdeal and Flipkart websites. Barra said Xiaomi was prepared with high inventories for the Redmi 2 Prime since all these devices are made in India for sale here. The price is lower than importing the device.
India is the second country outside China to get Xiaomi devices locally made after the Beijing-headquartered company got Foxconn to make its phones in Brazil in July. However, Xiaomi, the world's seventh-largest smartphone vendor globally in Q1, as per Gartner, and China's largest, took almost 18 months to set up the Brazil unit, three times longer than in India.
Xiaomi clocked sales of 3 million devices by July-end to be among the top seven smartphone vendors in India and may be the only handset vendor to start making phones in the country within a year of entering the market. Until now, all its products, including phones, were imported from China, a model followed by most companies that sell mobile phones in India.
The Make in India move is a big boost for Xiaomi, which has created a strong presence in the Indian market on the back of the high-specification, lowpriced smartphones it sells. Such devices have become the company's USP across the world and made it a stiff challenger to leaders Samsung and Apple. Xiaomi's local manufacturing and its plans to start selling phones through brick-and-mortar stores in 10-15 cities over the next two months underlines the importance of the Indian market, which has become its largest outside China. India head Manu Jain said the company may consider exporting devices from India, while focusing on Make in India for now.
Xiaomi has a dedicated Foxconn facility in Sri City, which has multiple assembly lines. Jain did not share details of the existing or projected capacity.
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