Contract manufacturer Dixon Technologies (India) Ltd on Wednesday said it is partnering with Xiaomi Corp's Indian arm to make and export phones for the Chinese firm.

The news, which boosted Dixon's shares by 4 per cent, comes after Xiaomi India revealed plans to start making wireless audio products in the country by partnering with electronics manufacturer Optiemus.

India has been encouraging global companies to invest more in local manufacturing as a part of its efforts to become a powerhouse in the global electronics supply chain.

Earlier in March, Xiaomi India President Muralikrishnan B told Reuters that the company will open more stores beyond its current network of 20,000 retail partners and boost local procurement of mobile phone parts, in an effort to reduce costs.