Foxconn, the Taiwanese manufacturing company, has partnered with Anil Agarwal’s Vedanta group, an Indian oil, gas, and metals conglomerate, to make semiconductor chips in India.
Foxconn has announced that it intends to invest $118.7 million, or around Rs 900 crores, in a joint venture with Vedanta. Foxconn and Vedanta have signed a memorandum of understanding to manufacture semiconductors, which Foxconn describes as a “major boost to local electronics manufacturing in India.”
Vedanta and Foxconn Sign MOU for Manufacturing Semiconductors in India
— CNBC-TV18 (@CNBCTV18Live) February 14, 2022
According to the MOU, Vedanta will hold the majority of the equity in the JV, while Foxconn will be the minority shareholder. Vedanta Chairman Anil Agarwal will be the Chairman of the joint venture company. pic.twitter.com/lGZBxbrDrX
Vedanta will control the bulk of the shares in the JV, while Foxconn would be a minority partner, according to the MOU. The joint venture business will be led by Vedanta Chairman Anil Agarwal.
This action follows the unveiling of the Rs 76,000 crore PLI scheme by the central government for semiconductor manufacturing in the country, which aims to make India one of the world’s major semiconductor manufacturing hubs. It would provide financial assistance of up to 50% of the project cost to qualifying bidders under this initiative.
Vedanta group Chairman Anil Agarwal indicated last year that the company will invest around Rs 60,000 crore over the next three years to establish a chip manufacturing cluster.
According to Rajeev Chandrasekhar, minister of state for electronics and information technology, the government has also decided to prolong the application window for its massive incentive-backed semiconductor chip design and production plan. The change is intended to allow a plethora of prominent global semiconductor companies to submit bids as well. According to sources aware of the developments, the government is mindful that, given the enormity of the commitment, firms may want more time to submit formal proposals.
On Tuesday, Union Minister for Electronics and Information Technology Ashwini Vaishnaw commended the industry’s “superb” response to the government’s semiconductor manufacturing initiative.
He said, “I am really pleased that such a positive response has been received from semiconductor industry participants in such a short time frame.”
The Production Linked Incentive scheme
Following the Covid-19 outbreak in 2020, the government proposed 13 Production Linke Incentive (PLI) schemes aimed at encouraging big companies to expand output, strengthen supply chains, and promote exports. The total incentives under the PLI schemes, which cover industries like telecom, electronics, auto parts, pharmaceuticals, chemical cells, and textiles, were initially estimated to reach Rs 1.97 lakh crore over a five-year period.
On December 15 last year, the Union Cabinet approved a Rs 76,000-crore programme to promote semiconductor and display manufacturing, with a focus on capital assistance and production-linked incentives.
Several chipmakers, notably Intel, TSMC (Taiwan Semiconductor Manufacturing Company), and United Microelectronics Corporation, have expressed interest in building up semiconductor manufacturing facilities in India because of the attractive PLI programme.
According to the World Bank’s latest Global Economic Prospects report, India’s GDP growth is expected to be 8.3 per cent this fiscal year and 8.7 per cent in 2022-23. The Statistics show that the Modi government’s Production-Linked Incentive (PLI) Scheme would help India’s economy develop at 8.7% in the fiscal year 2022-23, outperforming emerging market rivals such as China.
