Indian smartphone maker Karbonn Mobiles announced plans to invest up to US$3 million each in startups to build an ecosystem of apps and services for consumers, plugging it with its emerging portfolio of smartphones in the entry-to-mid price segments.

According to a report in The Economic Times, Karbonn has identified several startups for exploratory talks but has not decided on the number for investment. That will depend on the specialisation, product or service that the team can bring to its end consumers.

“We’re evaluating how developers will be able to bring in the necessary differentiation and relevance to our consumers,” Executive Director Shashin Devsare told ET. “Some of the startups that we’re looking at are in India and China,” he added.

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This development comes after rival Micromax announced that it will invest up to US$400 million this year, picking up stakes in at least 20 startups across the globe in segments such as healthcare, entertainment and gaming. These investments would range between US$0.5 million and US$20 million, depending on the size and maturity of the company.

Karbonn may look at a model where it would get into a strategic partnership to launch a product or service, let the consumers provide feedback, which goes back to the developer for further fine tuning, and then proceed with requisite investment.

The handset market in India has become hyper-competitive with brands such as Xiaomi and Gionee wooing the Indian consumers with high-end specifications at lowest prices. Experts have pointed that differentiation on services and native apps can help in attracting more consumers and retaining them.

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Through strategic investments in startups, Indian handset makers will be able to compete against rivals like Xiaomi and ensure that consumers can enjoy services that enrich their experience. The company is planning to invest INR 800 crore – INR 900 crore (US$125M – US$140M) in setting up local manufacturing facilities, starting with the assembly of devices.