Vedanta-Foxconn to invest Rs 1.54 lakh crore in India’s first chip factory

• Mining conglomerate Vedanta and Taiwanese electronics manufacturing giant Foxconn will make one of the largest ever investments of Rs 1.54 lakh crore in setting up India’s first semiconductor plant in Gujarat.

• The 60:40 joint venture of Vedanta-Foxconn will set up a semiconductor fab unit, a display fab unit, and a semiconductor assembling and testing unit on a 1000-acre land in the Ahmedabad district.

• Semiconductor chips, or microchips, are essential pieces of many digital consumer products — from cars to mobile phones and ATM cards. The Indian semiconductor market was valued at $27.2 billion in 2021 and is expected to grow at a healthy CAGR of nearly 19 per cent to reach $64 billion in 2026. But none of these chips is manufactured in India so far.

• A massive shortage in the semiconductor supply chain last year affected many industries, including electronics and automotive.

• Globally, countries such as the US are boosting domestic manufacturing capacity to cut reliance on imports. A global semiconductor shortage and geopolitical tensions with China have bolstered Washington’s drive to bring manufacturing back to American soil to regain leadership.

• The US has earmarked billions of dollars and is reportedly looking at alliances with other nations. 

• To cut dependence on imports from nations like Taiwan and China, the government brought a fiscal incentive scheme for manufacturing semiconductors in the country. Vedanta-Foxconn is one of the successful applicants for the Production Linked Incentive (PLI) scheme for semiconductors.

• Out of the total investment, Rs 94,000 crore will go into setting up the display manufacturing unit while Rs 60,000 crore will be invested in the semiconductor manufacturing facility.

• As per the MoUs signed by both parties, the Gujarat government will facilitate the investor in obtaining necessary permissions and clearances from the state departments concerned.

Additional read:

Cabinet clears Rs 76,000 crore incentive scheme for semiconductor production

In December 2021, the Union Cabinet approved a Rs 76,000 crore policy boost for semiconductor and display manufacturing ecosystem in a bid to position India as a global hub for hi-tech production. The programme will promote higher domestic value addition in electronics manufacturing and will contribute significantly to achieving a $1 trillion digital economy and a $5 trillion GDP by 2025.

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