Chinese smartphone maker OnePlus has been talking about making its flagship phone in India for some time now. In 2017, the company will make this happen, a top executive said.

“Our goal is to produce at least 70-80% of our demand for OnePlus 3T in India,” OnePlus India head Vikas Agarwal told FactorDaily. OnePlus 3T is the company’s latest premium smartphone.

The phone maker is currently making “trial batches,” in India to benchmark for quality. Once the demand from the global market stabilises, we’re likely to see a shift to production in the local market. And that’s likely to be in the current quarter.

“The trial rounds are already on. We are relooking at everything before making a final announcement,” said Agarwal. For now, the company will continue to import the phones.

Typically, brands have shied away from manufacturing in India because of the lack of an ecosystem for hardware manufacturing. “It’s easy to start, but hard to maintain quality,” Aggarwal said. But this is slowly changing. “Now with the government incentivising manufacturing, it is creating confidence in the mind of serious brand… It will probably take 5-10 years but you have to start somewhere,” he added.

Right now, brands assemble phones in India to get tax benefits offered by the government. Going forward, they need to move into full scale manufacturing and, then as a final step, make India an export hub if the manufacturing story has to be called a success.

India’s premium smartphone segment has been growing at a healthy clip and OnePlus has been able to carve out a niche for itself. As of September 2016, OnePlus ranked fifth in smartphone shipments to India, after Samsung, Oppo and Lenovo in the Android ecosystem, according to Cybermedia Research.

In the premium segment (phones priced between Rs 20,000- Rs 50,000) OnePlus is now the third largest seller with a 9.3% market share. Samsung leads in the segment with 37.3% and Oppo with 26.5%. Both Oppo and OnePlus are owned by BBK Electronics, a Chinese electronics company.

In 2017, the company will open six more service centers in India, taking the total number to 12, Aggarwal said.

Death of Indian smartphone brands

There was a time when Indian brands, which sold made-in-China products, ruled the market. But that’s going to drastically change as Chinese phone makers target the market directly.

“Fifteen years ago, there were only global brands. Then Indian brands saw the opportunity,” Agarwal told FactorDaily on the sidelines of the launch of their first experience store in Bengaluru’s upscale Brigade road. But eventually, he expects “most Indian brands to eventually exit the market… because they don’t really have any competitive advantage.”

This is already happening. According to IDC International, which tracks smartphone shipments, China’s Lenovo Group now has a 9.6% market share, pushing Indian brand Micromax to a number three, while Samsung Electronics continues to retain the top spot. Indian brand Lava has been displaced from the fourth position by Xiaomi.

Indian brands such as Micromax and Lava, which banked on distribution strength for sales, are going to face more aggressive opponents in Chinese brands. “They have scale and aggressive investments in marketing,” said Agarwal.

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