Vedanta Limited, an Indian multinational mining company headquartered in Mumbai, and Taiwanese multinational electronics contract manufacturer Foxconn have announced a $19.5 billion agreement to build what will be one of the first chipmaking factories in India.
In fact Vedanta is the third company to announce plans to build a chip plant in India, partly as a result of an Indian government drive to boost chip manufacturing in the country; this includes last year’s $10 billion package to attract investors.
Reuters says Foxconn is acting as the technical partner, while Vedanta is financing the project as it looks to diversify into chip manufacturing. The facility, which will be built in Prime Minister Modi's home state of Gujarat, has also been promised incentives. Reuters has suggested it has obtained subsidies on capital expenditure and electricity from Gujarat.
The site has yet to be chosen; some 400 acres of land will be required. The factory is expected to be built close to Gujarat's capital, Ahmedabad.
The state is holding elections in December and the promise of 100,000 jobs created by the project may boost the ruling party’s chances. However, real jobs may still be some way off; according to the memorandum of understanding, the facility is expected to start manufacturing chips within two years.
As the BBC points out, India has vowed to spend $30 billion to overhaul its tech industry. There will most likely be more incentives as India tries to become less reliant on chip producers in places like Taiwan, the US and China.
It’s been a busy week for Vedanta in terms of announcements. Along with the Foxconn deal Vedanta has said it is looking at creating a hub to manufacture iPhones and TV equipment. It may also move into the electric vehicle sector. The hub is likely to be built in the western Indian state of Maharashtra.