The Taiwanese electronics giant Foxconn has withdrawn from a $19.5 billion semiconductor joint venture with Indian conglomerate Vedanta. The move is a setback to India’s efforts to become a major player in the global semiconductor industry.
Foxconn and Vedanta announced the joint venture in 2022. The plan was to build a semiconductor manufacturing plant in India with an initial investment of $10 billion. The plant was expected to create over 100,000 jobs.
In a statement, Foxconn said that it had decided to end the joint venture in order to “explore more diverse development opportunities.” The company also said that it would remove its name from the entity that is now fully owned by Vedanta.
Prime Minister Modi’s Dream for the Development of the Semiconductor Industry in India
The Foxconn-Vedanta deal was part of Prime Minister Narendra Modi’s ambition to make India a major player in the global semiconductor industry. Modi has been a vocal advocate for the development of the semiconductor industry in India, and he has made it a priority of his government.
The Foxconn-Vedanta deal was seen as a major step in India’s efforts to achieve this goal. The joint venture was expected to create over 100,000 jobs and generate billions of dollars in revenue for the Indian economy. It would have also helped to reduce India’s dependence on imported semiconductors.
India has been trying to attract semiconductor manufacturers to the country for several years. The government has offered incentives such as tax breaks and land grants to try to lure companies to set up shop in India.
The Indian government offered a number of incentives to encourage the Foxconn-Vedanta deal, including:
- Customs duty exemptions: The government offered to exempt the joint venture from customs duties on imported capital goods and raw materials.
- Income tax breaks: The government offered to give the joint venture a 15-year tax holiday on its profits.
- Land concessions: The government offered to provide the joint venture with land at a subsidized rate.
- Power subsidies: The government offered to provide the joint venture with subsidized power.
These incentives were designed to make India an attractive destination for semiconductor manufacturing. However, it is unclear whether they were enough to overcome the challenges that Foxconn faced in the joint venture.
In addition to the government incentives, Foxconn and Vedanta were also reportedly in talks with the Gujarat state government to secure additional benefits. These talks may have been a factor in Foxconn’s decision to withdraw from the deal, as they could have delayed the project and made it more expensive.
The Foxconn-Vedanta joint venture was seen as a major step in India’s efforts to become a major player in the global semiconductor industry. However, the withdrawal of Foxconn is a blow to India’s chipmaking ambitions.
Impact of Foxconns’ Withdrawal
Government officials said that the withdrawal of Foxconn is a setback to India’s semiconductor ambitions, but it is not a fatal blow. Vedanta is still committed to setting up a semiconductor plant in India, and the company is in talks with other technology partners.
It remains to be seen whether Vedanta will be able to find a suitable technology partner and move forward with its plans to set up a semiconductor plant in India. However, the withdrawal of Foxconn is a blow to India’s chipmaking ambitions, and it will be a challenge for the government to find a new partner to replace Foxconn. The Indian government is likely to continue to offer incentives to attract other companies to invest in the sector.