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Vedanta, Foxconn to invest $19.5 billion to set up semiconductor plant in Gujarat

Vedanta Ltd and Taiwan's Foxconn will invest $19.5 billion under pacts signed on Tuesday to set up semiconductor and display production plants in Gujarat, the home state of Prime Minister Narendra Modi.

Reuters was first to report on Monday that the joint venture had secured support, including capital expenditure and electricity from Gujarat, to set up units near Ahmedabad, the western state's largest city.

The Rs 1.54 trillion investment, which Gujarat said was the largest by any group in an Indian state, comes ahead of the state's main local elections as Modi's ruling group faces a tough challenge from the opposition parties.

The companies said Tuesday that the Vedanta-Foxconn joint venture will create more than 100,000 jobs in Gujarat.

Most of the world's chip production is confined to a few countries like Taiwan, and India is now actively attracting companies "to usher in a new era of electronics manufacturing" as it seeks for ways to have seamless access to chips.

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The Vedanta project aims to start manufacturing displays and chip products within two years, Vedanta Chairman Anil Agarwal said at a public event in Gujarat, where an agreement was signed with state officials.

"India's Silicon Valley is now one step closer," Agarwal said in a tweet after the event.

In its statement, the state government said Vedanta will set up a display manufacturing unit with an investment of Rs 945 billion ($11.95 billion) and separate chip-related production units with an investment of Rs 600 billion ($7.58 billion).

The statement added that Vedanta and Foxconn will work closely with the state government to create high-tech clusters with the necessary infrastructure, including land, water, and high-quality semiconductors and power.

Gujarat pipped Maharashtra in a tight race to win the plant site.

Foxconn is acting as a technical partner, while oil-to-minerals group Vedanta is financing the project.

Foxconn said in a statement that state infrastructure and active government support were "increasing confidence in the establishment of the semiconductor plant."

The government said it will expand incentives beyond an initial $10 billion plan for those investing in semiconductor manufacturing as it aims to become a major player in the global chip supply chain.

Vedanta is the third company to announce the location of a chip plant in India after ISMC and Singapore-based IGSS Ventures, which are setting up shop in the southern states of Karnataka and Tamil Nadu, respectively.

Also Read: Motherson’s deal with Daimler to be EPS accretive right from the beginning: Vivek Chaand Sehgal

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