Vedanta Group, which has formed a joint venture with Taiwan’s Foxconn for setting up a semiconductor manufacturing unit in India, will invest Rs 1.54 trillion in the project and expects to break -even in five years. The JV firm’s fab unit will come up in Gujarat and the company on Tuesday signed a memorandum of understanding (MoU) with the state government to this effect.
The 60:40 joint venture 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.
“The plant will start production in two years and aims to break even in 4-5 years,” Vedanta chairman Anil Agarwal told reporters. “This is the largest ever investment in Gujarat… ours will be the first semiconductor plant in the country,” Agarwal said, adding local manufacturing of chips will make laptops and tablets affordable. He said that the investment will be funded through internal accruals.
Vedanta is amongst the five companies which have applied for the government’s `76,000-crore incentive scheme for development of semiconductors and display manufacturing ecosystem in the country. In fact, Vedanta has submitted two proposals – one where it has formed a joint venture with Foxconn for manufacturing chips, and the second, on its own for display fabs.
The company is confident of getting global orders once its semiconductor manufacturing unit is up and running in India. Vedanta Group is already into manufacturing fab glasses and optic fibre globally, so it feels it is not going to be a new business for the company. “We already make fab glasses in Japan, South Korea, and Taiwan and have 20,000 people working for us, so we are already in the business,” Agarwal had earlier said.
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.
“The Gujarat government will also extend fiscal and non-fiscal incentives and benefits as outlined under the Gujarat Semiconductor Policy-2022. Gujarat is the only state to have such a policy exclusively for the semiconductor industry,” Gujarat science and technology department secretary Vijay Nehra, who signed the MoU on behalf of the state government, said.
Besides Vedanta, a consortium of Dubai-based NextOrbit and Israeli tech firm Tower Semiconductor have earlier signed a deal with the Karnataka government for a plant in Mysuru while Singapore-based IGSS Venture has chosen Tamil Nadu as the location for its unit.
Prime Minister Narendra Modi hailed the MoU as one that will boost the economy and create jobs. “This MoU is an important step in accelerating India’s semiconductor manufacturing ambitions. The investment of `1.54 trillion will create a significant impact to boost the economy and jobs. This will also create a huge ecosystem for ancillary industries and help our MSMEs,” he tweeted.
In his address, communications and IT minister Ashwini Vaishnaw said that the Prime Minister has set a target of creating 10 million job opportunities in the electronics manufacturing sector.
Vaishnaw said that the government is working on taking electronics production from the present $80 billion to $300 billion.