The company, which will kickstart manufacturing operations with Zenfone 2 Laser followed by ZenFone Go, aims to manufacture 1.5 lakh smartphones a month by the end of the current financial year.
This will account for almost 80 percent of sales in India.
No financial details were, however, disclosed.
(Also see: Motorola Considering Setting Up Manufacturing Facility in India)
"India offers us a huge opportunity as smartphone penetration is just 10 per cent. We are excited to announce our local manufacturing facility that will cater to the growing demands of the market," Asus India Country Manager (System Business Group) Peter Chang told PTI.
India, one of the fastest growing smartphone markets globally, is poised to overtake the US as the second-largest market in next few years. Shipments in India grew 44 percent to 26.5 million units in April-June, says the data by research firm IDC.
Also, over the past few months, global smartphone makers like Xiaomi, Motorola and Gionee have commenced assembling their handsets in India, where the government is pushing local manufacturing through its 'Make in India' initiative.
"It is an opportune time to make the announcement as it will enable us to bring our cutting edge products to consumers who are looking for features and design sensibilities of a high-end smartphone at an economic price," he said.
Chang added: "We are aggressively targeting the Indian market. We aim to achieve five per cent market share in the country by next year."
Get your daily dose of tech news, reviews, and insights, in under 80 characters on Gadgets 360 Turbo. Connect with fellow tech lovers on our Forum. Follow us on X, Facebook, WhatsApp, Threads and Google News for instant updates. Catch all the action on our YouTube channel.