Gujarat Gets Semiconductor Project From Vedanta-Foxconn: Here’s Why This Deal Is Crucial

Gujarat Gets Semiconductor Project From Vedanta-Foxconn: Here’s Why This Deal Is Crucial
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On Wednesday, amid the hue and cry over Vedanta-Foxconn’s decision to set up its first mega semiconductor plant in Gujarat instead of the neighbouring state of Maharashtra, Vedanta Resources Ltd clarified the reason behind the location change. Vedanta chairman Anil Agarwal said that the decision to move from Maharashtra to Gujarat was strictly professional and independent. He also said that the company chose Ahmedabad as the Gujarat government met its expectations.

“We decided Gujarat few months ago as they met our expectations. But in July, meeting with Maharashtra leadership, they made a huge effort to outbid other states with competitive offer. We have to start in one place & based on professional & independent advice we chose Gujarat,” said Agarwal in his statement. 

The landmark deal between Vedanta-Foxconn and the Gujarat state government has triggered a political storm in Maharashtra, as the Opposition slammed the Eknath Shinde-led government for losing out on a multi-million dollar crucial project for the state. 

Shiv Sena leader Aditya Thackeray expressed his disappointment after the deal, and said that the project was snatched away from the state due to the Shinde government’s “lack of interest” in Maharashtra’s development. He said that he himself had worked to get the project for Maharashtra and brought this to the final stage.

“It is not sad that this project went to another state, but we wonder why it did not come to our state. The fact that the project, which has been worked on so much and given so much support by the MVA government, is going there means that new investors do not have faith in this Khoka government,” said Thackeray.

Nationalist Congress Party leader Supriya Sule said that changing the project location from Maharashtra to Gujarat seems to be part of a “conspiracy” to reduce the state’s importance. 

“I am making these allegations consciously… The Union government is consistently taking steps to demean Maharashtra. There will be a long-term setback for Maharashtra as we continue to lose more and more mega investment projects,” said Sule. 

Committed To Investing In Maharashtra

Vedanta chairman Anil Agarwal, meanwhile, said that the company is committed to investing in Maharashtra, and will soon create a hub where the state will be part of forward integration.

“Our team of internal & external professional agencies shortlisted few states viz., Gujarat, Karnataka, Maharashtra, TN etc to help achieve our purpose. For last 2 years we have been engaging with each of these govts as well as central govt & have received fantastic support,” tweeted Agarwal.

Why Is The Project Crucial?

Indian conglomerate Vedanta and Taiwanese electronics major Foxconn signed a Memorandums of Understanding (MoU) with the Gujarat government, on Tuesday, to set up India’s first semiconductor plant in the state, with an investment of Rs 1.54 lakh crore.

According to the MoU, the display FAB manufacturing unit, semiconductor assembling, and testing unit of the Vedanta-Foxconn joint venture will be set up in an area of ​​1000 acres in Ahmedabad district.

Both the companies will hold 60 percent and 40 percent respectively in this joint venture. “The plant will start production in two years,” said the Vedanta chairman to the media, after signing the deal.

Agarwal said that this is the “biggest investment” in Gujarat so far, and will be the first semiconductor plant in the country. It is estimated that local manufacturing of chips will bring down the prices of laptops and mobile tablets. “Today, a laptop costs Rs 1 lakh, and once the glass, as well as the semiconductor chip, is available (in India), the same can be priced at Rs 40,000 or less,” he said.

According to the MoU, the project is expected to create 100,000 jobs in Prime Minister Narendra Modi’s home state, which is headed for an assembly election in December this year.

Experts believe that the project will not only help in bringing down the prices of smartphones and laptops, but it will also boost the country’s electronic industry. From cars to mobile phones and ATM cards, semiconductors or microchips play a significant role in producing digital consumer products. 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. 

Besides Vedanta, Dubai-based NextOrbit and Israel’s Tower Semiconductor have signed an agreement with the Karnataka government for a semiconductor plant in Mysore. At the same time, IGSS Venture of Singapore has chosen Tamil Nadu as the location for its $3.2 billion semiconductor unit. 

India is currently purchasing chips from China, Taiwan, Denmark and Germany. Vijay Nehra, secretary of Gujarat’s Department of Science and Technology, who signed the MoU on behalf of the state government, said that 8 percent of all chips used in the world are made in Taiwan. Earlier, in December 2021, to build a semiconductor manufacturing hub in India, the Modi government approved a semiconductor incentive scheme worth Rs 76,000 crores.


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