In line with the government's 'Make in India' initiative, domestic handset vendor Karbonn will invest Rs 200 crore to set up a manufacturing plant at Tirupati in Andhra Pradesh.
Last week, Prime Minister Narendra Modi had laid the foundation stone for a dedicated mobile handset and electronics manufacturing facility at Tirupati.
Apart from Karbonn, the facility will house brands like Micromax, Celkon and Lava.
"We are setting up an integrated facility at Tirupati. The plant, which will be operational by September next year, will have a manufacturing capacity of 500,000 units a month," Karbonn Chairman Sudhir Hasija told PTI.
He added that the company will invest Rs 200 crore in the facility and employ 2,000 people to start with.
"We currently have a monthly capacity of 1.8-2 million units and we are looking at scaling this up to 2.5 million by December next year," he said.
Over the next few years, the plan is to develop the entire manufacturing ecosystem in India along with component manufacturing, he added.
"By 2017, we will have miniscule imports as we will manufacture in India rather than just assembling here," Hasija said.
Karbonn has a unit in Noida that manufactures feature phones. It is also setting up a facility in Haryana that is about thrice the size of the Noida plant.
Global handset makers like Samsung and domestic players like Micromax and Spice have assembly units in India.
Recently, international players like Xiaomi, Gionee and Asus have announced assembly units in India in partnership with electronics major Foxconn in Andhra Pradesh.
Handset makers are looking to tap the multi-billion dollar opportunity in India, which is one of the fastest growing smartphone markets in the world.
The Indian handset industry is poised to overtake the US as the second-largest market in next few years.
According to research firm IDC, shipments in India grew 44 per cent year-on-year to 26.5 million units in April-June 2015 quarter.