(Telecompaper) China's Xiaomi has tied up with Foxconn to start assembling phones in India. The confirmation comes as Foxconn announced plans with Maharashtra state to invest USD 5 billion in expanding its manufacturing operations in India, Reuters report. The investment is part of the Indian government's 'Make in India' campaign to attract more foreign investment in the country. Xiaomi already sells its smartphones in India since last year and is hoping that manufacturing in the country will help lower its costs further. An assembly line in the southern state of Andhra Pradesh has started rolling out Xiaomi's first locally made smartphone, the Redmi2 Prime. Apart from the tax benefits of making in India, the facility will help Xiaomi better manage inventory and reduce lead times from three to four weeks to under two weeks, said Manu Jain, the company's India head. He expects that over time most Xiaomi phones sold in India will be made in India. For Foxconn the new investment marks a return to the Indian mobile market. The contract manufacturer was forced to shut up shop in India last year after Nokia stopping making phones at its plant.