Ahmedabad: Indian conglomerate Vedanta and Taiwanese electronics major Foxconn will set up the country’s first semiconductor plant in Gujarat with an investment of Rs 1.54 lakh crore. The display FAB manufacturing unit, and semiconductor assembling and testing unit of the Vedanta-Foxconn joint venture will be set up in an area of 1000 acres in the Ahmedabad district of the state. Both companies will hold 60 percent and 40 percent respectively in this joint venture.
“The plant will start production in two years,” Vedanta Chairman Anil Agarwal told PTI after signing a Memorandum of Understanding (MoU) with the Gujarat government on Tuesday.
Semiconductors or microchips are used as essential pieces in many digital consumer products. It is used in the production of everything from cars to mobile phones and ATM cards. The Indian semiconductor market was valued at $27.2 billion in the year 2021. The sector is expected to reach $64 billion by 2026 with an annual growth rate of 19 percent. However, none of these chips are manufactured in India as of now. Last year, a severe shortfall in the semiconductor supply chain affected a number of industries, including electronics and automobiles.
The government has come out with a financial plan to encourage the manufacturing of semiconductors in the country to reduce dependence on imports from countries like Taiwan and China. In this episode, Vedanta-Foxconn is one of the successful applicants of the Production Linked Incentive (PLI) Scheme for Semiconductors.
Agarwal said, “This is the biggest investment in Gujarat. This will be our first semiconductor plant in the country. Local manufacturing of chips will bring down the prices of laptops and tablets.
A total investment of Rs 1.54 lakh crore is important for boosting the economy and jobs. It will also create a bigger ecosystem for ancillary industries and help our MSMEs.
Besides Vedanta, a consortium of Dubai-based NextOrbit and Israel-based technology company Tower Semiconductor have signed an agreement with the Karnataka government for a plant in Mysore. At the same time, IGSS Venture of Singapore has chosen Tamil Nadu as the location for its semiconductor unit. Vijay Nehra, Secretary, Department of Science and Technology, Gujarat, who signed the MoU on behalf of the state government, said that eight percent of all chips used in the world are made in Taiwan. It is followed by China and Japan.
“The upcoming plant will mark the beginning of chip manufacturing in India. It is also strategically important for India….as it will reduce our dependence on other countries.”
The official said that out of a total investment of Rs 1,54,000 crore, Rs 94,000 crore would be spent on setting up the display manufacturing unit. While Rs 60,000 crore will be invested in the semiconductor manufacturing plant. As per the MoU signed by both parties, the Gujarat government will facilitate the investors to obtain necessary clearances from the concerned departments. Gujarat Chief Minister Bhupendra Rajinikanth Patel assured that the state government would extend full cooperation to the companies investing in setting up the plant and making it a success.
Chief Minister Bhupendra Patel said on the occasion that both the companies would invest Rs 1,54,000 crore on setting up this plant in Gujarat. This will create one lakh employment opportunities. Patel said that the state government would provide full cooperation for this. Apart from this, Union Minister of Telecom and Information Technology Ashwini Vaishnav said that Prime Minister Modi has set a target of creating one crore employment opportunities in the electronics manufacturing sector. “When Prime Minister Modi launched the Digital India initiative about seven years ago, we wondered where this journey would take us in the future, as his thought process was completely different,” he said.
It is noteworthy that globally countries like the US are increasing their domestic manufacturing capacity to reduce their dependence on imports. Semiconductor shortages on a global scale and a geopolitical crisis with China have bolstered America’s drive to start manufacturing indigenously.
