For Vedanta Foxconn microchip plant, “Gujarat Saras che”
Vedanta and Foxconn have been evaluating potential locations for their semiconductor factory in India for some time. Finally, Vedanta and Foxconn have decided to zero in on Gujarat as their preferred state for setting up the upcoming semiconductor plant. Over the next few years, the joint venture between Vedanta group and Foxconn of Taiwan will invest close to $20 billion in creating a world-class semiconductor manufacturing facility right here in India. According to Reuters, this is the first major step in that direction.
The plant to manufacture semiconductors is expected to come up on the outskirts of the city of Ahmedabad. The Gujarat government has apparently rolled out the red carpet to woo Vedanta and Foxconn to plump for Gujarat over other states. For instance, in the case of the semiconductor factory, the Gujarat government has agreed to give Vedanta financial and non-financial subsidies including on capital expenditure. In addition, the state has also agreed to make available cheap electricity to build the semiconductor plants.
Vedanta had set out its aggressive charter of demands to the state of Gujarat ahead of giving a final go-ahead to the plant. Vedanta had sought over 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 as well as a fixed price for the next 20 years. While neither side was willing to comment, the news is that the big announcement and the inauguration as well as the final game plan is likely to be rolled out over the next few weeks.
Gujarat had to vie and outcompete many other states to get the prestigious project from Vedanta Foxconn. There were also other regions including the commercially wealthy state of Maharashtra, the rapidly growing state of Telangana and the digitally savvy state of Karnataka; which were also in the fray to invite Vedanta Foxconn to set up the plant in their states. Eventually, Gujarat managed to pip Maharashtra on the strength of the red carpet they were willing to roll out for the Vedanta group as also for the incentives offered.
The potential is huge. India's semiconductor market is estimated to touch $63 billion by 2026 from $15 billion in 2020. That is a more than 4-fold growth in just 6 years. Taiwan has dominated the chip industry for a long time and India is catching up late in the race. Foxconn already has a plant in South India from where it caters to some of the needs of Apple and even to Xiaomi. For India, it is not just about chips but the new era of electronics manufacturing. For Vedanta, it can be the deal that can reinvent its future.
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