Chinese smartphone manufacturer Xiaomi has been trying to crack the Indian market for a while, and a new deal with Taiwan-based tech giant Foxconn may see that ambition finally realised, as the company reduces costs by assembling phones at a factory in Andhra Pradesh.

India is the worlds fastest growing smartphone market, but a lack of infrastructure and reliable suppliers has hampered efforts to manufacture devices in the country, forcing most of Indias 100-plus phone companies to import devices from China, Taiwan and beyond.

The factory in the south of India is therefore a victory for Prime Minister Narendra Modi, who has put considerable weight behind a campaign to improve tech manufacturing in India and improve the countrys digital infrastructure.

Xiaomi will be manufacturing the Redmi2 Prime at the new site, an India-specific upgrade to its best-selling budget smartphone that will retail for ?6,999 (£70). The company only entered the Indian market in July 2014, but it has quickly become the firms second-largest market thanks to its low-priced phones proving popular with young, cost-conscious consumers.

Neither Xiaomi or Foxconn have disclosed how much they have invested in the Indian plant, or what they expect the future production capacity to be at the site, but Manu Jain, Xiaomis head of Indian operations, has said that the new facility will help them better manage inventory and reduce lead times.

“Over time, most Xiaomi phones sold in India will be made in India,” said Jain, although how long that supply chain will take to establish is open to debate.