The investment by Dixon in this factory is anticipated to exceed 4 billion rupees ($48.2 million) over a span of three years, the report said.
The facility, which covers an area exceeding 300,000 square feet, equivalent to six football fields, will primarily focus on the production of Xiaomi smartphones, the report said quoting anonymous sources, it said.
The inauguration of the plant is scheduled to be carried out by a government official towards the end of this month.
In response to India's initiative to promote localization, Xiaomi, headquartered in Beijing, has been compelled to form a partnership with Dixon for smartphone assembly.
Consequently, Xiaomi's previous suppliers in India, namely Taiwanese Foxconn Technology Group's Bharat FIH and China's DBG Technology Co., are expected to experience a decline in business.
Earlier this year, Xiaomi also entered a collaboration with India's Optiemus Electronics Ltd. to manufacture its Bluetooth neckband earphones, a product it had previously imported from China.
Xiaomi, once a dominant player in India's smartphone market, faced challenges due to increased regulatory scrutiny and over-expansion of its product range, which, as acknowledged by the company itself, led to customer confusion.
India, being the world's second-largest smartphone market, is fiercely competitive for major phone brands, including Apple Inc., all vying to increase their sales in the world's most populous country.
Xiaomi is banking on a gradual resurgence as it focuses on offering locally-produced, budget-friendly 5G smartphones.