InvestorQ : Can you tell me about the mega investment that Vedant and Foxconn are planning in the state of Gujarat?
Anjana Aiyar made post

Can you tell me about the mega investment that Vedant and Foxconn are planning in the state of Gujarat?

Khushi Patel answered.
2 weeks ago

It looks like Vedanta and Foxconn have finally zeroed in on Gujarat as the destination for their semiconductor factory. In fact, in the last round, Gujarat pipped Maharashtra to become the state where Vedant and Foxconn will invest close to $20 billion or Rs1.55 trillion to set up a chip manufacturing facility to reduce the cost of chips locally and to also meet the rising demand for chips in India. The idea is to create a world-class semiconductor manufacturing facility right here in India.

To attract the semiconductor factory to Gujarat, the state government has given out a slew of benefits to the company. For instance, the Gujarat government has agreed to give Vedanta financial and non-financial subsidies including some key subsidies on capital expenditure. In addition, the state agreed to make available cheap electricity to build the semiconductor plants. Semiconductor plants are extremely intensive in their consumption of power and water supplies and Gujarat government will ensure adequate supplies.

Vedanta had sought 1,000 acres of land free of cost on a 99-year lease. In addition, Vedanta had also sought water and power at concessional rates from the state government accompanied with a fixed price commitment for the next 20 years. The roll out could happen in the next few weeks. In the battle to get Vedanta to the state, Gujarat had to compete with the states of Maharashtra, Telangana and the digitally savvy state of Karnataka. Gujarat was finally selected as it was most receptive to their demands.

The enthusiasm is not hard to fathom. The potential is huge as India's semiconductor market is estimated to touch $63 billion by 2026. That is nearly 4-fold growth in about 6 years. Taiwan has long dominated the chip industry and India has been a late entrant to the race, despite the ecosystem already available. Foxconn already manufactures parts for Apple and Xiaomi in the state of Tamil Nadu. For India, it is not just about chips but the new era of electronics manufacturing. Vedanta is looking to rehash its future journey.