Barely two weeks after the Narendra Modi government approved Rs 76,000 crore incentive scheme for semiconductors, industry giant Vedanta has announced that it will invest up to Rs 60,000 crore to set up a sophisticated chip and glass manufacturing ecosystem in India over the next three years.
Vedanta Group led by billionaire Anil Agarwal has already laid the framework for the plant. In December 2017, Vedanta had acquired a Japanese glass substrate manufacturer named AvanStrate from the Carlyle Group, which may give the company a headstart.
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Talking about the new developments, Akarsh Hebbar, managing director of AvanStrate told TOI, “We are in the last stages of negotiations with various state governments for setting up a factory that would require between 250 acres and 400 acres. Overall investments into the project will range between $6 billion (Rs 45,000 crore) and $8 billion (Rs 60,000 crore) in the first two phases, following which we will carry out further assessment of the market for expansion,”
Vedanta, looking to set up its camp, is currently in discussions with governments in Haryana, Gujarat, Maharashtra, Telangana, Tamil Nadu, and Karnataka. The company believes that it could forge joint partnership with state governments, with the latter providing some incentives.
Vedanta putting Sterlite experience behind
Vedanta had been in the news after its Sterlite copper plant was shut down in Tamil Nadu. Ever since the plant was closed (courtesy of the activism of some vested interest groups), India has gone from being a net exporter of the precious commodity to becoming an importer of the same.
However, Vedanta, unperturbed by the unpleasant experience, is looking to bet big on the semiconductor industry.
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New Delhi in talks with Taiwan to bring chip factories to India
Moreover, Vedanta is not the only company to dip its toes in the emerging market. As reported by TFI, the Modi government has been in advanced talks with Taiwan over bringing a semiconductor chip plant worth an estimated $7.5 billion to India to supply everything from 5G devices to electric cars.
To smoothen the process, the two nations are on the verge of signing a Free Trade Agreement which may antagonize China, as an added bonus.
Tata Group already eyeing the semiconductor market
Furthermore, last month, Tata group, which recently saved Air India, announced that it is all set to invest close to $300 million in an outsourced semiconductor assembly and test (OSAT) plant.
An OSAT plant sources silicon wafers from semiconductor foundries, and then packages, assembles and tests them, finally turning them into finished semiconductor chips. For the same, Tata is in talks with at least three states — Karnataka, Telangana and Tamil Nadu. The final venue of the OSAT plant could be finalised soon, with operations expected to start by late 2022.
Potential clients of Tata’s OSAT business include companies such as Intel, AMD and STMicroelectronics. Of course, Tata will also source semiconductors for its own needs from this very plant, while many Indian companies will also benefit tremendously from Tata’s initiative to make India independent when it comes to crucial microchips.
Also read: Tata jumps into the global chip war and that’s great news for India
Why the demand for semiconductors?
Ever since the pandemic began, the rise in demand for electrical equipment has led to an increase in the demand for semiconductors. Usually made of silicon, semiconductors are a strategic technological asset in today’s globalised world.
From car batteries to laptops to smartphones to household appliances to gaming consoles and everything in between, semiconductors perform the fulcrum of the job in powering smart electronic devices.
The global semiconductor industry is valued at around 481 billion dollars as of 2018 and is dominated by companies from South Korea, Taiwan, and Japan, all of which happen to be India’s friends.
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Semiconductors are a strategic asset and manufacturing semiconductors is a tedious as well as an arduous process. It takes months and the government of India can no longer afford to wait for such a long duration if it wants to realise the $5 trillion economy dream by 2025. Thus, Prime Minister Narendra Modi is aggressively batting for bringing Semiconductor manufacturing into the country.
Given the fact that India is already the second-largest player after the United States as far as the software industry is concerned, an edge in hardware manufacturing would make the country a tech powerhouse.