Vedanta’s Dream Of Setting Up India’s First ‘Silicon Valley’ Might Get Delayed

The dream of setting up India's first own chip manufacturing base by Vedanta Founder, Anil Agarwal, and Hon Hai Technology, might observe a delay as Center likely to reject incentives owing to the technological deficits.

September 2022 saw Anil Agarwal, the Chairman and Founder of Vedanta Resources, signing a Memorandum of Understanding (MoU) with the Gujarat state government for setting up a semiconductor hub worth 19.5 billion dollars in the state as a joint venture with world’s biggest maker of electric components Foxconn.

While this could have potentially given birth to more than 10,000 jobs in the country, yet this dream could witness a standstill until the Government of India sanctions the funding required for the set-up.

On a previous occasion, in order to bring forth chipmakers into India and set up the semiconductor sites, Prime Minister Narendra Modi had promised that his administration would bear half the cost and pledged 10 billion dollars for the same initiative.

However, the Indian billionaire’s mission to bring the chip sector into India had failed in establishing appropriate manufacturing-grade technology, which is the prime factor behind the venture being stymied by the Center.

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Nine months post the announcement of building India’s own Silicon Valley and the chip partnership deal, it is shocking to observe that no company dared to partner the project for technological innovations, or in other way the joint venture failed to license the manufacturing-grade technology of the 28nm chip in question.

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The government could only lend assistance to the proposed project if any of the above two criteria had been come to fulfillment.

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Even though the metal and mining conglomerate of the business tycoon is struggling to pay off the heavy debt, 6.8 billion dollars of which still is left, yet Agarwal came out to be visionary brain behind the first chip making undertaking of India.

The crucial funding, worth billions of dollars, could get a pushback from India, as it has unfortunately not met the criteria set by the government.

The issue that has hit the Vedanta dream has brought forth yet another difficulty of setting up the semiconductor base in the country.

No wonder India has always been outsourcing its semiconductor needs from countries such as Vietnam, China, Korea, and Taiwan, thanks to the lack of specialized expertise and the massive budget in setting up the base in India.

JV, Vedanta & Foxconn

Vedanta and Foxconn (also called the Hon Hai Technology Group) had together applied for the approval of manufacturing 28nm chips, be that as may, neither of the two parties possess any previous experience in chip making.

The joint venture sought to enable more licenses as per the requirement, whilst Taiwan-based Foxconn concentrated on bringing in the technology partners and Vedanta was accountable for the factory construction.

Moreover, 60 per cent of the equity in the joint venture is secured by Vedanta, and the remaining 40 per cent is held by Foxconn.

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The major assembler of iPhones in the world, Hon Hai had caught hold of development-grade technology and production-grade high volume 40nm technology for more sophisticated 28nm chips.

Nevertheless, since the application was initially forwarded for production of 28nm chips, the Center may soon direct Vedanta to ensure the submission of an all new application with regard to the 40nm chips, and also provide a revised estimate of the capital expenditure in order to get a sanction.

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Notably, India has yielded little success in wooing the best-in-class chipmakers into the country, yet a powerful bid revolving around the 40nm chip production could even more push its effort to drive in substantial technologically-adept firms as soon as the application process for incentives start over again.

For licensing of the chip fabrication technology, Vedanta had also been in talks with STMicroelectronics NV, a global semiconductor leader with French-Italian origin.

Vedanta and Foxconn can surely file a fresh application with the amendments, but the present denial of funding would subject a delay in the prominent semiconductor base set up in India, much against the ambitions of the mastermind Anil Agarwal.

Proofread & Published By Naveenika Chauhan

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