Dixon Technologies India Ltd., a supplier to Xiaomi Inc., is set to open a massive new Manufacturing Facility on the outskirts of New Delhi, as India pushes Chinese tech firms to use local assembly partners.

Dixon will invest more than 4 billion rupees ($48.2 million) in the factory over three years, which will be spread over more than 300,000 square feet, or the size of six football fields, and will primarily produce Xiaomi smartphones, according to people familiar with the matter, who declined to be identified because the matter is private. The plant will be dedicated by a government official at the end of this month.

Beijing-based Xiaomi was forced to collaborate with Dixon for smartphone assembly because India is pressuring Chinese companies to localize everything from device manufacturing to distribution. As a result, Xiaomi's older Indian suppliers — Taiwanese Foxconn Technology Group's Bharat FIH and China's DBG Technology Co. — are set to lose business.

Earlier this year, Xiaomi awarded a contract to India's Optiemus Electronics Ltd. to manufacture its Bluetooth neckband earphones, which it had previously imported from China.

Xiaomi was once unrivaled in India's smartphone market, but it lost steam after facing increased regulatory scrutiny and overexpanding its product portfolio, which, according to the company, confused customers.