Xiaomi is closing in on Samsung as India becomes the second-largest smartphone market.

Xiaomi is having an outstanding year in terms of sales, and as a result the Chinese manufacturer is moving up the ranks in India. The company sold 23.16 million phones in Q2 2017, an uptick of 70% from last year, and hit the 25 million sales milestone in just over three years of operations in India.

Xiaomi Mi Mix 2

According to Counterpoint Research, the boost in sales has allowed Xiaomi to cement its position as the second-largest smartphone brand in the country.

Samsung is still leading the charts, with the South Korean manufacturer's market share unchanged from last year at 23%. Xiaomi is now just one point away with market share of 22%, a dramatic rise of 16% from the same period a year ago.

India market share Xiaomi

Counterpoint also noted an increase in the market share of local manufacturers Micromax and Lava, particularly in the feature phone segment:

Samsung and Xiaomi together contributed to almost 45% of the smartphone market. This is the first time since 2012, that the top two brands have reached this level of combined share, signaling that key brands are ramping up their presence in India.

Additionally, the quarter was marked with return to growth for local handset players such as Micromax and Lava in the smartphone segment.

Meanwhile, a survey from market research firm Canalys revealed that Samsung shipped 9.4 million units in Q3 2017, with Xiaomi pushing out 9.2 million units in the same quarter. That's a 290% increase from Q3 2016.

Xiaomi's YoY sales increased by a staggering 290% in India.

Vivo and OPPO also saw sizeable gains, and are in third and fourth places respectively. The Indian smartphone market overall saw a 23% uptick from Q2 2016, with shipments crossing 40 million units for the first time in a quarter. As a result, the country is now the second-largest smartphone market in the world, after China.

With Xiaomi set to unveil a new selfie-focused phone later this week in the country, the brand will likely surge past Samsung in the coming months.

Xiaomi's focus on the budget segment means it works on thin margins — effectively limiting revenue — but with the launch of the Mi Mix 2 in the country, the company is laying the groundwork to target the mid-range segment. From Canalys' Rushabh Doshi:

Xiaomi's growth is a clear example of how a successful online brand can effectively enter the offline market while maintaining low overheads.

But Xiaomi focuses on the low end. It struggles in the mid-range (devices priced between INR15,000 and INR20,000 [US$230 and US$310]), where Samsung, Oppo and Vivo are particularly strong. Nevertheless, we predict Xiaomi's continued go-to-market innovations will allow it to overtake Samsung within a couple of quarters.