Taiwanese manufacturing company Foxconn on Monday said that it has decided to pull out of a joint venture with Indian conglomerate Vedanta to make semiconductors in Prime Minister Narendra Modi’s home state of Gujarat.
Foxconn, which is one of Apple’s biggest suppliers, signed a pact last year to invest Rs 1.5 lakh crore for the venture in a bid to tap into India’s plans to become an electronics major.
In a statement on Monday, Foxconn said it had worked with Vedanta for over a year to “bring a great semiconductor idea to reality” but now the companies mutually decided to end the joint venture.
The electronics maker said it is working to remove the Foxconn name from what is now a fully-owned Vedanta entity.
“Foxconn is confident about the direction of India’s semiconductor development,” the statement added. “We will continue to strongly support the government’s ‘Make In India’ ambitions and establish a diversity of local partnerships that meet the needs of stakeholders.”
Vedanta said it has other investors lined up for the project, without elaborating further. “We will continue to grow our semiconductor team, and we have the license for production-grade technology for 40 nm [nanometre] from a prominent Integrated Device Manufacturer,” the metals-to-oil conglomerate said.
The semiconductor project had been struggling due to the lack of a technology partner, Reuters reported in June. The two companies had attempted to rope in European chipmaker STMicroelectronics as a partner but the talks were deadlocked.
In September, the Opposition in Maharashtra had alleged that the coalition government of the Eknath Shinde-led Shiv Sena and the Bharatiya Janata Party had handed over the project to Gujarat under pressure from Modi in view of the Assembly polls that were held in the state in December. The project was estimated to create over one lakh jobs.
However, Vedanta Resources Limited Chairperson Anil Agarwal had said that the company’s decision to set up its semiconductor unit in Gujarat was based on “professional and independent advice”.
Foxconn’s withdrawal will not impact India: Rajeev Chandrasekhar
On Monday, Union minister Rajeev Chandrasekhar claimed that Foxconn’s decision will have no impact on India’s plans.
“Its not for the government to get into why or how two private companies choose to partner or choose not to, but in simple terms it means both companies can and will now pursue their strategies in India independently, and with appropriate technology partners in semiconductors and electronics,” Chandrasekhar said.
The minister of State for Electronics and Information Technology added that both Foxconn and Vedanta have significant investments in India and are valued investors.
But the Congress criticised the Bharatiya Janata Party government, saying that one cannot trust “manufactured headlines” about the “Gujarat Model” or “New India”.
“This has been the fate of many MOUs [Memorandum of understanding] signed in the Vibrant Gujarat summits year after year, and will be the fate in other such copycat summits like Global Investor Summits in Uttar Pradesh,” Congress General Secretary Jairam Ramesh said.
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