Vedanta has partnered with Foxconn through a 60:40 joint venture to set up an integrated display and semiconductor fabrication ecosystem in the country
Questions are being raised after Vedanta and Taiwan’s Foxconn picked Gujarat instead of Maharashtra to set up India’s first semiconductor plant. The reason? The companies were in talks with the Maharashtra government earlier and it looked like both the parties would sign the Memorandum of Understanding (MoU) soon but Gujarat emerged as the winner at the last moment.
Vedanta has partnered with Foxconn through a 60:40 joint venture to set up an integrated display and semiconductor fabrication ecosystem in the country.
The JV was in an advanced stage of discussion with the Maharashtra government to set up the $22 billion (around Rs 1.54 lakh crore) project in the state.
Officials from the companies had met Maharashtra Chief Minister Eknath Shinde and deputy Chief Minister Devendra Fadnavis in July 2022.
Maharashtra’s Industries department said the company executives had finalised over 1,000 acres of land in Talegaon Phase IV.
In a recent interview with Economic Times, Vedanta Group chairman Anil Agarwal said a 'team of professionals' had chosen Gujarat as the location for the Vedanta-Foxconn combine's upcoming Rs 1.5-lakh crore semiconductor and display fabrication plant.
Here’s What Anil Agarwal Said
Anil Agarwal said he had "no say" in choosing Gujarat over Maharashtra. He said the funds for the project would be raised through debt and that the company had no plans as of now to sell an equity stake.
Agarwal said picking Gujarat over Maharashtra was a “professional decision” as Foxconn, a top management consultancy firm, an accountancy firm, and an expert, visited five or six states.
“I had no say at all in choosing Gujarat. But we had a time constraint and we had to move quickly. We didn't want to give another two months to them to keep evaluating, We said, "Put a full stop. You recommend and whatever you decide, we will go ahead with." They recommended we go to Gujarat.” he said.
Agarwal, however, did not name the consultants who suggested Gujarat.
When it comes to the funding of the project, the Vedanta Group chairman said it will be done in two phases and in first phase they will invest around $10 billion, adding that funding “will never be an issue”.
Agarwal also denied reports of him considering making smartphones and electric vehicles, adding that at the moment, he is focused on making raw materials.
Blame Game In Maharashtra
In the last week of July, the company’s delegation held a meeting with CM Shinde and his deputy Fadnavis. Following the meeting, Maharashtra Industrial Development Corporation issued a press note, which said, “Vedanta is in active discussion with the government of Maharashtra for their proposed manufacturing facility for semiconductors and display fabs. With a high concentration of skilled manpower, connectivity to the port, seamless domestic supply-chain and highly developed industrial infrastructure, Talegaon in Pune has emerged as a prominent option for Vedanta and Foxconn for their $22 billion investment, that can generate more than 200,000 direct and indirect jobs.”
The note further said Vedanta conducted site visits to Talegaon in Pune and found the location to be an ideal match for their requirements.
Shinde, too, had said it was a win-win scenario as Maharashtra has the required skilled manpower and industrial and logistical infrastructure suited for a project of this scale.
The opposition in Maharashtra slammed the Shinde government for the state "losing" out on the Rs 1,54,000-crore mega semiconductor project.
Meanwhile, Congress has alleged something "sinister" behind the change of location with the NCP saying the plant was "snatched" away.
State NCP president and former minister Jayant Patil said the state has lost an investment potential of more than Rs 1 lakh crore.
Shiv Sena leader Aaditya Thackeray said the previous Maha Vikas Aghadi (MVA) was in touch with the company. A meeting had also taken place with its representatives in January this year.
It was almost decided that the plant will come up in Maharashtra, said Aaditya Thackeray, adding the current dispensation has lost the confidence of potential investors, hence such mega projects are not coming here."
Why Gujarat Was Picked Over Maharashtra?
The Maharashtra government’s key offer was a capital subsidy of up to 30 per cent for setting up the plant at Talegaon industrial area, among other incentives.
Besides, the incentive package included a power tariff subsidy of 1 rupee per unit, including support to Vedanta to set up a 750 MW captive solar power generation unit. Apart from subsidies on land, water and power charges, the Maharashtra government had also offered waivers on stamp duty as well exemption from electricity duty.
Gujarat is set to witness Assembly elections soon and politically, it will benefit the ruling BJP government.
On the other hand, the ruling Shinde-led government in Maharashtra has blamed the previous Maha Vikas Aghadi (MVA) government for not extending more incentives to the company to clinch the investment.
In a tweet, PM Modi said, “This MoU is an important step accelerating India’s semi-conductor manufacturing ambitions. The investment of Rs 1.54 lakh crore will create a significant impact to boost economy and jobs. This will also create a huge ecosystem for ancillary industries and help our MSMEs.”
As incentives, Vedanta had sought 1,000 acres (405 hectares) of land free of cost on a 99-year lease, and water and power at concessionary and fixed prices for 20 years, according to a Reuters report.
In July, the Gujarat government announced a dedicated, subsidies-laden policy for semiconductor and display fab manufacturing. Apart from subsidies in power, land, and water tariff, the Gujarat Semiconductor Policy 2022-27 also featured the development of a Semicon City in the Dholera Special Investment Region (SIR), for a dedicated manufacturing hub of semiconductors and display fab sector, as per the news report.
The proposed semiconductor manufacturing fab unit will operate on the 28 nanometre (nm) technology (tech) nodes with wafer size 300 millimetre; and the display manufacturing unit will produce Generation 8 displays catering to small, medium, and large applications.