A subsidiary of Micromax, Yu Televentures, has partnered Cyanogen to offer customised user experience to end users.
The first handset will be launched next month. Details of the device and pricing were not disclosed.
"This will be a game changer not just in India but globally too. Yu has been envisioned for building an ecosystem of connected devices and offer customised experience to users," Micromax co founder Rahul Sharma told PTI.
The brand will engage directly with end users, providing them with bootlegger access to help them come up with software upgrades that they want on their phones, he added.
Cyanogen operating system, built on Android, is known for delivering rich software advancements that optimise performance, customisation, security and privacy features on mobile devices.
Asked if the brand will eat into Micromax's market share, Sharma answered in the negative.
"Yu is aimed at digital natives, tech enthusiasts who want more out of their phones and are constantly doing that," Sharma said.
There will be a forum for them to voice out their ideas and those will incorporate in the software updates that will be done every fortnight, he added.
"The product will offer the best value for money in the world. We will line up more products in the coming days, which will be sold through online channels," he said.
Yu is in discussions with ecommerce players for selling the product online.
Apart from smartphones, Yu would also focus on bringing other smart devices to the Indian market, he said without divulging details.
According to research firm IDC, the smartphone market in India grew at 84 per cent year-on-year in the quarter ended June 2014 to 18.42 million units from 10.02 million units (in April-June 2013 quarter).
Korean handset maker Samsung led the smartphone market with 29 per cent share, followed by Micromax 18 per cent, Karbonn 8 per cent and Lava 6 per cent.