The joint venture between Foxconn and Vedanta was meant to add more heft to India’s growth story. According to the $19.5 billion joint venture, the two firms were set to jointly invest in a semiconductor fabrication plant in Gujarat, which would manufacture 28-nanometre semiconductors.
For the unversed, semiconductors are critical components for consumer electronics.
The JV was deemed a giant leap in Prime Minister Narendra Modi’s chipmaking plans for India.
The project also made for a fine election sloganeering as it had the promise of creating one lakh jobs in the state.
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So, why did Foxconn, a Taiwanese multinational electronics contract manufacturer, which specialises in the manufacturing of computer, communications, and consumer electronics goods, remove its name from what is now a full-owned entity of India’s Vedanta?
Foxconn is yet to specify a reason. We may recall that the start was anything but favourable. According to reports, the semiconductor plant was supposed to be set up in Maharashtra but was moved to Gujarat, following a political uproar before the assembly elections in the state.
Further, The Mint quoted a Reuters report as saying, “Concerns about incentive approval delays by India’s government had contributed to Foxconn’s decision to pull out of the venture. New Delhi had also raised several questions on the cost estimates provided to request incentives from the government.”
Meanwhile, US-based Micron Technology, the first company to receive approval under the incentive scheme, seems to be on for semiconductor chip assembly, packaging and testing, another report claimed. Micron is investing only 30% of the $2.75 billion with 50% coming from the Centre and 20% from the Gujarat government.
The BJP government, in the meantime, has stayed upbeat, saying that the JV cancellation hasn’t dented India’s semiconductor ambitions. MoS IT Rajeev Chandrasekhar has said that calling the development a blow is a “bad idea to bet against India under PM Modi”.
Chandrasekhar added it wasn’t the government’s prerogative to examine “why or how two private companies choose to partner or choose not to”.
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