Vedanta, Foxconn to invest $19.5 billion for semiconductor project in Indian PM Modi's home state Gujarat

On Tuesday, Vedanta Ltd. and Foxconn of Taiwan finalised anagreement to invest $19.5 billion (INR 1.54 trillion) tobuild semiconductor and display manufacturing facilities in India's western state of Gujarat.

According to a report from Reuters, the joint venture received subsidies from Gujarat for capital costs and electricity in order to build units close to Ahmedabad, the state's major city.

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The investment comes ahead of significant local elections in Gujarat, the home state of Indian Prime Minister Narendra Modi, as his ruling coalition faces a formidable challenge from opposition groups.

As per the state government of Gujarat, the showpiece investment of INR 1.54 trillion was the highest ever made by any group in an Indian state.

The state government in its statement announced that Vedanta would set up two units: a chip-related production unit with an investment of 600 billion rupees ($7.58 billion) and a display manufacturing facility in which it will invest 945 billion rupees ($11.95 billion).

According to the statement, Vedanta and Foxconn will collaborate closely with the state government to create high-tech clusters with the necessary infrastructure, such as land, semiconductor-grade water, and power.

Vedanta and Foxconn claim that this joint venture will create more than 100,000 jobs in the state.Vedanta is the third business to announce a chip production projectin India.

Earlier multinational consortium ISMC and Singapore-based IGSS Ventures, have announced that they were establishing chip manufacturing units in the southern Indian states of Karnataka and Tamil Nadu, respectively.

The majority of the world's chip production is concentrated in a small number of nations, such as Taiwan. India whichis a late entrant is actively courting businesses to "usher in a new era in electronics manufacturing" as it looks for ways to have easy access to chips.

In order to become a major player in the global chip supply chain, the Indian government has stated that it will increase incentives for those investing in semiconductor production beyond an initial $10 billion plan.

(With inputs from agencies)

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