Major update on manufacturing semiconductors in India. Vedanta signs MoUs with the Gujrat government to set up semiconductors and display fab units. Here, India’s Vedanta and Taiwanese Foxconn have come up with a joint venture to manufacture semiconductors in India.
On a positive note, both companies have not only focused on semiconductors but also on manufacturing display panels indigenously. At present, India domestically produces many electronic gadgets. But they are all basically “assembled in India”, not totally “made in India”. India already announced many incentives for industries to manufacture semiconductors in India, as well as displays.
Building an electronic gadget need lots of different components. For instance, a smartphone needs PCB, semiconductor chips, display panels, Camera modules, etc. Importing the individual components and assembling the phone in India is not an economical way to do it.
India imposes up to 20% import duty on respective components and then 18% GST on sales. If we include import tax, the burden of taxes is very high. Therefore, it is better to manufacture most of the components in the country to significantly cut down on imports, thereby reducing the cost of finished products.
The Government of India has intentionally increased import duties on some sectors to encourage local manufacturing of goods. However, it’s a challenge for foreign companies to invest heavily in the country directly, so partnering with local companies is a beneficial decision. Many companies are moving with local partners, like India’s Tata Group and Taiwanese Wistron are talking about jointly making Apple iPhones in India.
India’s Profit – Manufacture Semiconductors in India
The semiconductor fabrication unit will produce 28 nm chips, while the display unit will manufacture Generation 8 displays to serve small, medium and large applications. Vedanta will hold 60% of the equity in the joint venture, while Foxconn will own 40%. Moreover, both the company looking to set up a semiconductor manufacturing plant in the next two years. It is difficult for any foreign company to “manufacture semiconductors in India” without a local joint venture.
The project is bringing a total investment of ₹1,52,000 crore and will open a gate of around 1 lakh employment. Display panel and semiconductor chip manufacturing technology are critical, and once this technology is developed in a country, the electronic manufacturing ecosystem becomes ready for the huge players.
In addition, using locally made displays and semiconductors will reduce the prices of electronic items such as laptops, smartphones and more. In addition, the entire project will boost India’s electronics economy, and it’s a crucial step towards “Atmanirbhar Bharat” in semiconductors and display panels.
Anil Agarwal, chairman of Vedanta, said- “Made in India” semiconductors could drastically reduce the prices of finished products. He told a leading news channel- Today, a laptop costs ₹1 lakh, and once the glass, as well as the semiconductor chip, are available, the same can be priced at ₹40,000 or less.