Apple is set to start assembling its lower-priced iPhone SE in India in the coming months, an industry source with direct knowledge of the matter told Reuters on Friday.

All iPhone SE units will be made in a facility that Apple’s contract manufacturer will set up at Peenya on the outskirts of Bengaluru. All devices will be targeted at the domestic market.

Apple has a minuscule market share in India, a 1.25 billion people market where inexpensive handsets priced at or below $225 dominate sales. Last year, the company shipped 2.5 million iPhones to India. Market researcher Counterpoint estimates that three-quarters of smartphones sold in India were made locally.

In the holiday quarter, Apple ranked tenth in India’s smartphone market but led the premium segment with a 62 percent market share, Counterpoint said.

To lower cost of production, Apple has been in talks with the Indian federal government regarding issues such as tax concessions. However, the initial manufacturing of iPhone SE units was not contingent on those concessions.

According to The Economic Times newspaper, Apple planned to initially assemble 300,000 to 400,000 iPhone SE handsets in India, but Reuters has learned that the numbers would be “substantially lower” to begin with.

Last month, Apple cut a deal with the Indian government to kick off manufacturing operations in the Karnataka-based facility. Apple’s Taiwan-based manufacturing partner Wistron will be reportedly running the plant and assembling iPhone SE units.

Source: Reuters