Xiaomi India has announced a collaboration with Dixon Technologies to produce smartphones for both the domestic and export markets.

Xiaomi will investigate the establishment of a component ecosystem through wholly owned subsidiaries in order to deepen the value chain of its smartphones.

Dixon intends to start manufacturing Xiaomi smartphones in August-September at a new 320,000 square foot facility in Noida, which is currently under construction.

"This partnership will leverage Dixon's manufacturing excellence and superior execution track record, as well as Xiaomi expertise and leadership in the Indian business ecosystem," said Atul B. Lall, Dixon Technologies' vice chairman and managing director.

The development comes after the government asked Chinese handset makers to collaborate with domestic manufacturers to deepen the supply chain in India and reap the benefits of the production-linked incentive scheme.