Enlarge Image Yu

India is the new, hot smartphone market, and the battle for real estate there is only getting hotter. Facing increased competition from Chinese companies, Indian brand Yu is upping both its hardware and software game.

On Tuesday, it launched a smartphone dubbed the Yu Yunicorn. The metal-clad phone sports a 5.5-inch 1,920x1,080-pixel display and is priced at 12,999 rupees, which converts to around $190, AU$265 and £135.

Despite the low price, it's no slouch. The Yunicorn is powered by an octa-core MediaTek Helio P10 chipset, coupled with 4GB of RAM and 32GB of internal storage, which can be expanded with a microSD card.

Other features include a 13-megapixel rear camera and a 5-megapixel selfie shooter. It has some premium touches, like a fingerprint sensor and a 4,000mAh battery, which the company claims can keep the device ticking for two days on a single charge under normal use.

Yu is a subsidiary of Micromax, India's top local smartphone company. Micromax is using the Yunicorn to increase its presence in the midrange smartphone market, which has seen growing competition from Chinese brands like Xiaomi with its Redmi Note 3 and Lenovo with its Zuk Z1.

The Indian smartphone market is important not just to local brands but to international ones. It's growing at a quick rate, which is why companies like Apple are trying to bolster their presence there.

Unfortunately for Micromax, Yu has yet to turn a profit despite selling over 2 million smartphones in its 18-month existence. So in addition to upping the hardware ante, Yu is looking to software to make itself stand out.

Last month, the company announced Project Highway, a new in-house community working to create Yu Open OS.

Yu Open OS provides developers and users alike with base Cyanogen software and allows them to customize and improve it. The developer community, half of which is outside India, makes suggestions and writes new tweaks. Yu's team polishes them up and adds to the final build.

Yu has integrated several local (and some international) services into the OS. You can book a ride with Uber, book an appointment with a doctor, order food with Zomato and pay for mobile recharges using TranServ without opening any apps. Many of the underlying services come from companies in which Micromax has invested.

The Yu Yunicorn will be available June 7 on Indian e-commerce site Flipkart.