This comes amid border tensions between India and China, and the Modi administration’s call for self-reliance in the production of mobile phones and electronic parts. The government announced in June a production-linked incentive (PLI) scheme for firms to promote electronics manufacturing.

“We are looking at a very big opportunity, and we’re already in talks with large global players for servicing not only the domestic markets but also export markets,” said Atul Lall, CEO of Dixon Technologies.

Dixon Technologies also owns Padget Electronics—among domestic manufacturers that have applied for the ₹41,000 crore PLI that aims to make India a global manufacturing hub for smartphones. The country is currently the world’s second-largest smartphone market, with 152.5 million units shipped in 2019, according to IDC.

According to government estimates, global and Indian companies that have applied for the PLI scheme will produce goods worth ₹11.5 trillion over five years and export about half of the production.

The scheme extends an incentive of 4% to 6% on incremental sales of goods manufactured in India under the targeted segments.

Smartphone makers have already begun investing in expanding capacities and their manufacturing capabilities to move beyond just assembling phones, to a more “design-led” manufacturing approach that includes software and hardware design, and product aesthetics.

“We also have to extend our service to the electronics manufacturing sector (EMS). And that’s the reason why we’re investing in Sojo as well for EMS,” said Shailendra Nath Rai, co-founder of the Lava brand of smartphones. Lava and its unit, Sojo Manufacturing Services, have also applied for the PLI scheme. EMS includes the manufacturing of display panels, camera modules, silicon wafers and other parts.

Lava plans to produce as many as 100 million smartphones annually in the next few years, while Dixon’s Lall said the company will be able to make almost 70-to-80 million smartphones per year soon. Both did not give a specific time frame.

To attract large mobile phone vendors to India, the country needs to ramp up its manufacturing capacity, Rai said, adding that Lava is already investing in building Sojo’s capacities to meet future requirements.