As India pushes for local manufacturing, Xiaomi supplier Dixon Tech will open a smartphone plant

Dixon Technologies India Ltd., a supplier to Xiaomi Inc., plans to open a sizable new plant on the outskirts of New Delhi as India encourages Chinese tech companies to work with local assembly partners.

According to people familiar with the situation who declined to be identified because the information is private, Dixon will invest more than 4 billion rupees ($48.2 million) over a period of three years in the factory, which is spread out over more than 300,000 square feet, or the size of six football fields and will primarily produce Xiaomi smartphones. A government official is scheduled to officially open the plant at the end of this month.

Beijing-based Because India is pressuring Chinese companies to localize everything from device manufacturing to distribution, Xiaomi was forced to work with Dixon for smartphone assembly. This implies that Xiaomi’s more established suppliers in India, Bharat FIH of Taiwan’s Foxconn Technology Group and DBG Technology Co. of China, are likely to experience a decline in sales.

Requests for response from Xiaomi and Dixon reps were not answered.

Similar to this, Xiaomi contracted India’s Optiemus Electronics Ltd. earlier this year to produce its Bluetooth neckband earbuds, a device it had previously imported from China.

Xiaomi was previously the undisputed market leader for smartphones in India, but it lost ground as a result of increased regulatory scrutiny and an overabundance of products that, according to Xiaomi, confused users.

India, the second-largest smartphone market in the world, is a fiercely competitive territory for the major phone brands, with producers like Apple Inc. competing to increase sales in the world’s most populated nation. In order to provide domestically produced 5G smartphones at an affordable price, Xiaomi is counting on a slow recovery.

The Xiaomi alliance is yet another plus for domestic company Dixon, which is competing with Foxconn, Apple’s Taiwanese supplier best known as the primary manufacturer of iPhones, to become India’s answer. Sunil Vachani, the company’s founder and a dapper dresser who frequently dons elegant coats or formal suits, founded Dixon in a rented shed outside of New Delhi thirty years ago with borrowed funds. Today, Dixon is a rapidly growing electronics company that produces goods for companies like Motorola and Samsung, including smartphones, washing machines, and televisions.