In its first major step after inking a joint venture with Taiwan-based electronics contract manufacturer Hon Hai Technology Group, also known as Foxconn, Vedanta has picked Gujarat for its ₹1.54 lakh crore semiconductor plant.
Vedanta Resources Ltd. chairman Anil Agarwal took to Twitter to share the details, and termed it a "landmark investment", which will help make the country an "Atmanirbhar Silicon Valley". The JV project will officially kickstart India's journey from "being a Chip Taker to a Chip Maker", he adds. Currently, only 9% of the country’s semiconductor requirement is met locally. The JV will provide a much-needed boost to the industry.
Amid the development, the Vedanta stock rose 3.44% to touch its intraday high of ₹279.55. The stock outperformed the sector by 2.61%.
“History gets made,” says Agarwal, adding that he's "Happy to announce that the new Vedanta-Foxconn semiconductor plant will be set up in #Gujarat. Vedanta’s landmark investment of ₹1.54 lakh crores will help make India's Atmanirbhar Silicon Valley a reality, he says.
The JV project will generate around 1 lakh direct jobs. The project, which will include display and semiconductor facilities, was finally approved after the company received financial and non-financial subsidies from the government, in terms of land, power and water supply, as per a global news agency.
Discussions were going on with a few state governments to finalise the location of the plant for a long now. Agarwal thanked both the Centre and the Gujarat government for helping "Vedanta tie things up so quickly". "My deep gratitude to the #Gujarat Govt & the Union IT Minister, who have helped Vedanta tie things up so quickly. India's #tech ecosystem will thrive, with every state benefiting via the new electronics manufacturing hubs," he adds.
The chairman of the mining giant says the project will help fulfil Prime Minister Narendra Modi's vision of creating a robust manufacturing base in India. "It will also reduce our electronics imports and provide 1 lakh direct skilled jobs to our people...going from job seekers to job creators!".
Vedanta holds the majority of the equity in the JV, while Foxconn is the minority shareholder. Vedanta Chairman Anil Agarwal is the chairman of the JV company. The collaboration is the first JV in the electronics manufacturing space in India after the government’s policy announcement for electronics manufacturing and a PLI scheme for incentivising organisations to contribute toward the development of this sector.
Besides the JV, Vedanta Group already has two companies – Avanstrate Inc. and Sterlite Technologies – in the electronics and technology space.
To help drive more initiatives under the themes of Make in India and Digital India, the government, in its last budget, had pushed the total allocation to $936.2 million. Government policies including PLI, New Electronics Policy, 2019, Electronics Manufacturing Clusters, and Scheme for Promotion of manufacturing of Electronic Components and Semiconductors (SPECS) are all being equipped to boost domestic design, manufacturing and assembly.
The Centre has also launched the Semicon India Programme, with a total outlay of ₹76,000 crore to develop the semiconductor and display manufacturing ecosystem. The scheme provides financial support to companies investing in semiconductors, display manufacturing and the design ecosystems.
India’s semiconductor component market is expected to rise manifold to touch the total revenue worth $300 billion during 2021-2026, joint research by the India Electronics & Semiconductor Association (IESA) and Counterpoint Research has revealed. The share of local sourcing is expected to grow to over 17% by 2026, which translates into a six-fold rise in locally-sourced semiconductor revenues.