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Chinese tech giant Xiaomi plans massive production units in India, with local manufacturer Padget

Xiaomi, the prominent Chinese smartphone company, has partnered with a leading Indian consumer electronics firm. This move aims to ramp up the production of Xiaomi’s smartphones and other devices within India. This comes as New Delhi intensifies regulatory oversight in the region.

In a filing to the Bombay Stock Exchange, Dixon Technologies announced its collaboration with Xiaomi through its subsidiary, Padget Electronics. This partnership involves the assembly of Xiaomi’s smartphones and other electronic products at Dixon’s facility in Noida, a city in the Gautam Buddha Nagar district in the northern state of Uttar Pradesh.

Dixon’s Vice-Chairman, Atul B Lall, referred to the deal as a significant achievement in the Indian government’s “Make in India” initiative. This initiative aligns with the manufacturing drive promoted by Indian Prime Minister Narendra Modi.

The partnership with Padget exemplifies how major smartphone brands such as Xiaomi and Apple are increasing their production activities in India to cater to the rising demand in the world’s second-largest smartphone market, just behind China.

Xiaomi initially established local production in India in 2015 in collaboration with the electronics contract manufacturer Foxconn Technology Group.

However, Xiaomi downplayed the significance of this new contract manufacturing deal in India. According to a statement from Xiaomi India, this recent announcement merely continues their existing partnership. Xiaomi has five electronics contract manufacturing service providers in India, with Padget being one of them.

Indian Prime Minister Modi’s financial incentives to boost local manufacturing have been instrumental in attracting increased investments from major electronics brands. These brands seek to diversify their production away from mainland China, particularly as the domestic market for smartphones in India has continued to expand.

Dixon’s filing indicates that Padget is among the few companies that have received grants from a government-backed program promoting the manufacturing of telecommunications and networking products within India.

The partnership with Padget comes after Xiaomi’s recent announcement of plans to expand its network of physical retail stores throughout India. Currently, the company operates 18,000 stores in the country.

This expansion strategy underscores Xiaomi’s determination to counter the decline in its market share in India, even as it remains embroiled in a protracted legal dispute with the New Delhi government over the release of $676 million in frozen funds.

Indian authorities have alleged that Xiaomi disguised remittances to foreign entities as royalty payments. Xiaomi has consistently denied any wrongdoing, contending that the US tech company Qualcomm’s expenses were entirely legitimate.

As of the second quarter, Xiaomi held approximately a 15 percent share of India’s smartphone market, ranking third, with Samsung Electronics and Vivo leading the way, according to data from Counterpoint Research.

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