Apple reportedly reached a deal to start assembling lower-priced iPhones in India, with a contract manufacturer setting up a facility in technology hub Bengaluru (Bangalore) to focus on producing only iPhones.

Taiwan-based Wistron will initially assemble 4-inch iPhone SE models at a new plant that will have a capacity of 300,000 to 400,000 units, The Economic Times (ET) reported.

Sources said US-based Apple plans to go ahead with production without waiting for the government to approve a list of requested tax concessions.

Bloomberg reported in early February Apple had neared a deal to manufacture iPhones in India, with production in Bengaluru to begin by the end of April.

Apple aims to take advantage of rapid smartphone growth in India, which is the world’s second largest smartphone market. Smartphone shipments in India increased 23 per cent in Q3, making it one of the fastest growing markets.

iPhone shipments in India reached 2.5 million last year, with a third coming in Q4, according to Counterpoint Technology Market Research.

Apple is also looking to comply with local content requirements, which have increased as the government pushes its “Make in India” campaign. Counterpoint estimates three-quarters of smartphones sold in India last year were made locally.

The government’s move to eliminate INR500 ($7.46) and INR1,000 notes created a cash shortage resulting in a sharp slowdown in smartphone sales in the last few months.

The government strategy squeezed Apple’s sales and cut shipments of iPhones in Q4 by as much as 50 per cent to less than one million units. The vendor slashed its fiscal 2017 (the year to end-September 2017) revenue target in India to $2 billion from $3 billion, ET reported.