Earlier this year, Mozilla (developer of Firefox web browser) had tied up with Indian firms - Intex and Spice - to bring smartphones priced at USD 25 or Rs 1,500 to India.

Similarly, under the Android One initiative, Google has partnered Spice, Micromax and Karbonn from India to deliver a smartphone under USD 100 or Rs. 6,000.

Both handsets are expected to add to the competition in the world's fastest growing multi-billion smartphone market.

"We will have the handsets in before Diwali. These phones are designed for driving connectivity at affordable prices. We were chosen for our innovation, we are among the chosen few to work with these global giants to bring these devices to India," Spice Retail CEO devices TM Ramakrishnan said.

Spice is aiming to grow its revenues in the country by over 40 percent to Rs 2,000 crore this fiscal, buoyed by the strong growth in its smartphone business.

"Last year, our revenues were Rs. 1,400 crore and this year, we expect it to grow Rs. 2,000 crore (fiscal ending June 2015). We expect to grow our market share to over 4 percent from about 2.2 percent now," he said.

Ramakrishnan added that the numbers could change depending on the response to the new devices coming in.

Smartphone sales in the country grew almost three-fold to over 44 million in 2013, buoyed by affordable devices made by other domestic companies like Micromax and Karbonn, according to research firm IDC.

In the first quarter of 2014, 17.59 million smartphones were shipped in India compared with 6.14 million in the same period of 2013.

While Samsung is the category leader with a 35 percent market share, Micromax had 15 percent, Karbonn 10 percent, Lava six percent and Nokia four percent in Q1, IDC said.

Low-cost handsets prices less than Rs 5,000 and smartphones not costing more than Rs 7,000 from Asian handset makers including Huawei, ZTE, Micromax and Karbonn have been driving growth in the emerging markets of Asia and Africa.

Spice will also invest Rs 160 crore during the fiscal (July 2014-June 2015) for various  advertising and marketing campaigns.

"About 85 percent of our portfolio is priced under Rs 8,000. We are focussed on tier II and III cities and towns. Though we have higher priced models as well, but we are seeing very high growth rates between 250-300 percent in the smaller markets," he said.