Vedanta and Foxconn to invest $19.5bn in chip and display plants in India

Joint venture project will create more than 100,000 jobs in Gujarat

A man walks past the logo of Vedanta outside its headquarters in Mumbai, India. Reuters

Vedanta and Taiwan's Foxconn will invest $19.5 billion to set up semiconductor and display production plants in Gujarat, the home state of Indian Prime Minister Narendra Modi.

The joint venture, which was signed on Tuesday, obtained subsidies, including on capital expenditure and electricity, from Gujarat to set up units near the western state's largest city, Ahmedabad, Reuters reported.

The showpiece investment, which Gujarat said was the largest ever by any group in an Indian state, comes before key local elections in the state where Mr Modi's ruling group is facing a tough challenge from opposition parties.

The companies said on Tuesday that the Vedanta-Foxconn joint venture project would create more than 100,000 jobs in Gujarat.

Most of the world's chip output is limited to a few countriesm such as Taiwan and late entrant India is now actively luring companies to “usher in a new era in electronics manufacturing” as it seeks for ways to have seamless access to chips.

The Vedanta venture aims to start manufacturing display and chip products within two years, Vedanta chairman Anil Agarwal told a public event in Gujarat, where an agreement was signed with the state officials.

“India's own Silicon Valley is a step closer now,” Mr Agarwal said in a tweet after the event.

Vedanta will set up a display manufacturing unit with an investment of 945bn rupees ($11.95bn) and separate chip-related production units by investing 600bn rupees, the state government said.

Vedanta and Foxconn will work closely with the state government to establish high-tech clusters with requisite infrastructure, including land, semiconductor grade water and power.

Gujarat pipped India's richest state, Maharashtra, in a close race to win the plant location. Foxconn is acting as the technical partner while oil-to-metals conglomerate Vedanta is financing the project.

Foxconn said that the state's infrastructure and the government's active support increased “confidence in setting up a semiconductor factory”.

The Indian government has said it will expand incentives beyond an initial $10 billion plan for those investing in semiconductor manufacturing, as it aims to become a key player in the global supply chain for chips.

Vedanta is the third company to announce a chip plant location in India after international consortium ISMC and Singapore-based IGSS Ventures, which are setting up in the southern states of Karnataka and Tamil Nadu, respectively.