Vedanta-Foxconn leads race to get govt nod for chip plant

The Vedanta-Foxconn JV is eyeing a $20 billion chip plant in Gujarat.
The Vedanta-Foxconn JV is eyeing a $20 billion chip plant in Gujarat.


ISMC lags behind while Singapore’s IGSS Ventures is almost out of the race.

NEW DELHI : Only one of the three semiconductor manufacturing proposals submitted to secure financial support under India’s $10 billion incentive scheme is likely to make the cut, a top official familiar with the development said.

The Vedanta-Foxconn joint venture’s $20 billion proposal in Gujarat is expected to be the first to secure government approval, while the other two, submitted by the International Semiconductor Consortium (ISMC) and Singapore’s IGSS Ventures, lag behind, with the latter one almost out of the race.

“All three proposals are being evaluated, and all have got some questions that have been asked by the advisory committee and the India Semiconductor Mission. At least, one of the three, IGSS from Singapore, is clearly not meeting the cut, and they’re not responding to the questions that we are asking," the official said, asking not to be named since the evaluation of the proposals was not public.

He said the criterion that the applicant has production-worthy licensing of technology was not being met.

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“The other two are in the run, but in the process, between the two, because Vedanta-Foxconn is talking about technology, technology sourcing and licensing, which is a little bit more credible than the ISMC proposal, they’re being ranked higher, as of today," the official added.

India is offering a range of financial incentives and other measures, such as infrastructure development and streamlined regulations, to entice global companies to establish semiconductor fabs in the country amid competition from China, Taiwan, and South Korea in attracting investments.

Local manufacturing will reduce the nation’s dependence on imports and boost its resilience to global supply chain disruptions such as the one last year while also creating jobs and fostering economic growth.

A second government official said that if approved by the relevant authorities, any number of proposals could be funded under the scheme until the $10 billion financial assistance fund gets exhausted. “There’s no limitation that we will fund only one or two projects," the second official said.

The ministry of electronics and information technology formed an advisory committee of experts in April, comprising senior government officials, established academics as well as industry and domain experts.

Spokespeople for IGSS Ventures, ISMC partner Next Orbit Ventures, Vedanta Group, Foxconn or Hon Hai Precision Ltd did not respond to questions as of Wednesday evening.

A senior executive from ISMC said on the condition of anonymity that the consortium would put in a revised application soon, seeking a 50% subsidy on the project cost under the revised scheme. He added that the revised application would have global-level semiconductor technology providers on board. “We’ve been given the go-ahead by the consortium partners, and a revised application will be filed," the executive said. “We will have more partners, and Intel’s acquisition of Tower Semiconductor will also be completed soon, which will make them a formal partner in the proposal," he added.

ISMC is a joint venture between Abu Dhabi-based Next Orbit Ventures and Israel’s Tower Semiconductor, which was acquired by Intel Inc. in February last year. Reliance Industries and HCL were in talks to invest in the consortium, The Economic Times reported last year. The ISMC consortium signed an MoU with the Karnataka government for a $3 billion fabrication plant in Mysuru, where it has sought 150 acres at Kochanahalli industrial area.

The Centre had in October revised the financial incentives scheme, increasing the subsidies from 30% to 50% of the project costs for semiconductor fabs across technology nodes, display manufacturing, compound semiconductors, silicon photonics, sensors fab and semiconductor ATMP (assembly, testing, marking and packing) facilities or OSAT (outsourced assembly and testing) facilities. It had also removed the subsidy cap of 12,000 crore.

Anil Agarwal-promoted Vedanta Resources inked a joint venture with the world’s leading contract manufacturer Foxconn to set up a display fabrication unit, integrated semiconductor fabrication unit and OSAT facility with an investment of $20 billion. Within this project, Vedanta Displays Ltd will set up a display fabrication unit with an investment of 94,500 crore, Vedanta Semiconductors will set up an integrated semiconductor fabrication unit and OSAT facility at an investment of 60,000 crore. Vedanta will hold 60% of the Gujarat project, with Foxconn owning the rest through Foxconn Semiconductor Group.

India Semiconductor Mission under the Digital India Corporation is the nodal body which has administrative and financial autonomy to drive India’s semiconductor strategy and implement several schemes laid out by the government for the development of the semiconductor and display manufacturing ecosystem.

One of the schemes is the Semicon India programme, with a total outlay of 76,000 crore, or $10 billion, for the development of semiconductor and display manufacturing, launched in December 2021. The government expects investments worth over 2 trillion to come to India on the back of the schemes. Under the scheme, the government had got three proposals.

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