India's Vedanta fell more than 2 per cent on Tuesday, a day after Taiwan's Foxconn said it withdrew from a $19.5 billion semiconductor joint venture with the metals-to-oil conglomerate.
Shares of Vedanta fell as much as 2.6 per cent to 275 rupees ($3.34) per share, having already fallen more than 24 per cent as of the last close.
The companies partnered last year to set up semiconductor and display production plants in Gujarat state. Concerns about incentive approval delays by India's government had contributed to Foxconn's decision to pull out of the venture, a source familiar with the matter said on Monday.
Foxconn's withdrawal from the project serves as a blow to Indian Prime Minister Narendra Modi's chipmaking plans in the country, which had become a top priority for India's economic strategy in pursuit of a “new era” in electronics manufacturing.
S&P Global Ratings said that Vedanta's planned semiconductor business does not increase immediate liquidity pressure, adding that it believes there is no immediate sizeable funding commitment for the semiconductor project, pending government approval.
The Securities and Exchange Board of India, the country's market regulator, had imposed a 3 million rupees fine on Vedanta about two weeks ago for disclosure requirement violations regarding the Foxconn venture.
