Chinese phone maker Xiaomi is setting up a shop in India.

In order to "shorten delivery times and prop up margins," the smartphone company is reportedly talking with several state governments to set up new manufacturing plants in the country to keep pace with demand.

Xiaomi is collaborating again with Taiwanese contract manufacturer Foxconn for the new manufacturing plants. The two companies already have an assembly unit set up in Andhra Pradesh.

Manu Jain, head of Xiaomi's India operations, told the Economic Times: "We are looking to expand capacity and set up more lines and plants. We are proactively looking at it and are working with our partner Foxconn. Currently, discussions are on with different governments."

China is still Xiaomi's number one priority, but the company—along with other Chinese smartphone makers—are also betting heavily on creating presence outside of their home country. Xiaomi said its sales in India, where it has been enjoying steady popularity, has grown "month over month" thanks to its "online-centric approach."

Xiaomi global vice president Hugo Barra (in photo) told reporters the company sold more than a million units of its sub-Rs. 10,000 Redmi Note 3 smartphones, placing Xiaomi behind Samsung in the top two largest smartphone brands in the online space.

Barra was quoted by the Economic Times saying, "The demand for Redmi Note 3 is higher. We brought in 6 lakh units for the first two months, which is a fairly big number. Still, we are running out of stock."

India is considered to be the second largest smartphone market in the world, trailing behind the Chinese market, which has been quite saturated at the moment. India, in comparison, is still kicking strong partly due to the government's "Make in India" programme that has been luring companies to set up manufacturing units in the country, Xiaomi included.