China's Lenovo today said it has started making smartphones in India through contract manufacturer Flextronics, as it looks to cut cost to take on competition.
The Flextronics' unit at Sriperumbudur near Chennai has already started rolling out two of Moto E smartphone's 4G variants and will start making another 4G device Lenovo K3 note, soon.
The 40,000 square feet plant is the first to rollout both Lenovo and Motorola brands. Lenovo had acquired Motorola last year.
The factory currently has a capacity of making 6 million smartphone units.
The company said that both Lenovo and Motorola will have separate manufacturing lines at the same facility which will house 1,500 employees.
The move follows Foxconn Technology beginning production of smartphones in the country for Chinese brands including Xiaomi and OnePlus after the government raised import tariffs to attract investment in manufacturing.
Lenovo India Chairman and COO, Asia Pacific Amar Babu said that the company expects its partner to source about 30 per cent components locally. "We are talking to government to improve availability of components locally to improve the total value of devices."
He said the phones produced in the plant is focused mainly on serving the Indian market, while the company has no immediate plans to design and develop phones specifically for the country.
"Outside China, this is the only facility where both Lenovo and Motorola smartphones are being manufactured," Babu said.
The idea is to integrate the supply chains of Lenovo and Motorola for manufacturing, even though the two will remain distinctly different brands, he added.
Lenovo has a plant in Pondicherry which manufactures ThinkPads and personal computers.
Bubu further said, "The Indian government's thrust on 'Make in India' has opened up a plethora of opportunities for organizations looking to conduct business in India."
Foxconn, the world's biggest contract manufacturer of electronics goods including for Apple Inc, has announced plans to set up as many as 12 factories in India.
Last week, Xiaomi announced start of assembling its Redmi 2 Prime smartphone at its new factory in Vishakapatam. Xiaomi is still sourcing its materials for Redmi 2 Prime from China.
Also, Micromax co-founder Rahul Sharma's Yu Televentures and Xolo's Black brand of smartphones have announced similar plans.
"Lenovo is not new to manufacturing in India. We recognised the potential of India and we invested in PC manufacturing several years ago.
"Lenovo's investment in the new manufacturing plant represents the potential we see in the Indian market and our long term commitment to our customers," said Chen Xudong, President MBG Group, Lenovo and Chairman Motorola Mobility Operating Board.
In the past ten years, "our brand has grown manifold in India. We are excited to expand our presence and tap into India's competent talent pool that will enable us to develop cutting-edge products for our customers across the world", he said.
Lenovo, the world's largest PC maker, said 6 million smartphones will be made at the Sriperambudur unit this fiscal.
Currently, India is the third largest smartphone market in the world, according to IDC. "We believe this an opportune time," Babu said.
Lenovo said that they have grown 330 per cent in India from last year based on IDC numbers and are very bullish on the market and plans to make further investments in the country.