China's Huawei to start India smartphone production in Oct

September 23, 2016 8:05 AM EDT

Journalists attend the presentation of the Huawei's new smartphone in Paris, May 7, 2014. REUTERS/Philippe Wojazer/File Photo

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By Swati Bhat and Paul Carsten

MUMBAI/BEJING (Reuters) - Chinese telecoms giant Huawei Technologies Co Ltd [HWT.UL] will start making smartphones in India next month, the company said on Friday, joining a wave of compatriots setting up plants in the world's third-biggest mobile market.

The plant will be operated with the Indian arm of electronics manufacturer Flextronics International Ltd in the southern Indian city of Chennai, Huawei said.

India is trying to attract manufacturing into the country as part of Prime Minister Narendra Modi's "Make in India" initiative.

Huawei got the green light from the government in July to set up the manufacturing plant in India, 19 months after applying for a license.

"We are convinced about the growth potential and future of India and we'll keep looking for opportunities to increase our presence here," Jay Chen, CEO, Huawei India said in a statement.

India is the world's fastest growing smartphone market and an attractive country for phone makers given growth in China is stagnating.

The number of smartphone users in India is expected to reach 990 million by 2020 from 798.4 million in 2015, according to a study by Cisco.

But so far a lack of good suppliers and infrastructure have hampered efforts to manufacture phones in the country, forcing most of India's more than 100 different phone companies to import from China and Taiwan, though the Modi government is making efforts to make it easier for manufacturers.

"The vendor ecosystem in India is not as strong as it is in China. A lot of things still need to be imported from China when it comes to things like electronic components, batteries, display or others, but I am sure as the market progresses, we will start to see true manufacturing happening here in India," said Anshul Gupta, research director at Gartner.

The devices made by Huawei in India are likely to hit the Indian market as early as October, the statement said, with the company looking to manufacture 3 million units by the end of 2017.

The company will also strengthen its after-sales services in India with over 200 service centers, including more than 30 exclusive Huawei service centers in the country.

Huawei will also expand its Indian retail network, increasing to more than 50,000 the number of outlets it partners with by the end of the year.

Other manufacturers from China are also setting up in India. In 2015 China's Xiaomi Inc [XTC.UL] joined forces with Taiwan-based electronics contract manufacturer Foxconn to assemble phones in India.

(Editing by Rafael Nam and Adrian Croft)

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