Vedanta-Foxconn JV reapplies for chip manufacturing unit incentives

The company had earlier announced that the plant will be set up in Dholera, Gujarat, with an investment of around Rs 1.5 trillion and start making revenue by 2027

The Vedanta-Foxconn joint venture (JV) on Tuesday said it had re-submitted an application to set up an electronic chip manufacturing plant in India.

“We have submitted the application as per the revised guidelines. We are committed to building a world-class fab in India,” Vedanta Foxconn Semiconductor said in a statement.

Its earlier application could not qualify for receiving financial incentives after it failed to get a partner with technical expertise in producing advanced semiconductor chips.

In the new application for making chips under the government’s $10 billion production-linked incentive (PLI) scheme, the company has sought government incentive in the 40-nanometer (nm) chip category, instead of 28-nm proposed earlier. 

The announcement comes a day after a media report stated that Foxconn was searching for a new partner, stepping back from the year old JV with the Anil Agarwal-led Vedanta group. The report had mentioned that government officials had suggested Foxconn to onboard a different partner due to concerns over Vedanta’s financial stability.

The company had earlier proposed to set up a plant in Dholera, Gujarat, with an investment of around Rs 1.5 trillion, which would start earning revenue by 2027. 

The Ministry of Electronics and Information Technology in September 2022 revised the semiconductor PLI scheme with uniform 50 per cent incentives of the project costs for all semiconductor nodes. The ministry last month invited new proposals from existing applicants, as the focus of the scheme shifted away from advanced semiconductors with smaller nodes.

Under the modified PLI programme, the government may provide a fiscal incentive of up to 50 per cent of the project cost for setting up semiconductor fabs in India of any node, including mature nodes.

Similarly, the fiscal incentive of 50 per cent of the project cost is available for setting up display fabs of specified technologies in India.

Earlier, the scheme offered fiscal support of 30 per cent of capital expenditure to approved units for setting up compound semiconductors, silicon photonics, sensor fabs, and semiconductor assembly test marking and packaging facilities in India.