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Lei Jun, chairman and CEO of China's Xiaomi Inc. presents the company's new product, the Mi Note on January 15, 2015 in Beijing, China.
ChinaFotoPress—ChinaFotoPress via Getty Images

Chinese smartphone maker Xiaomi announced Monday that it will begin assembling handsets in India as the company charges into the fast-growing market.

Xiaomi, known for its affordable but high-quality headsets, will produce its smartphones in a plant run by Taiwanese contract manufacturing company Foxconn, which agreed to spend $5 billion on research and development in state of Maharashtra, the Wall Street Journal reports.

The agreement is part of Indian Prime Minister Narendra Modi’s “Make in India” initiative, meant to transform India into a global manufacturing hub. Xiaomi, too, will benefit from tax breaks and lower inventory costs, per the Journal.

The Indian market has already proven highly profitable for Xiaomi, whose low-cost smartphones have rapidly sold out in the developing country. Other competitors, like Samsung, have also taken steps to enter the lucrative Indian market.

Read next: Why Xiaomi Terrifies the Rest of the Tech World

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