The way Gautam Adani, chairman of Adani Group, is going through a period of financial crunch to restart his stalled projects, the same situation is seen with Anil Agarwal at present. Now the shock they have got is even bigger. The government has refused to give money for Anil Agarwal's chip business. Which is considered a major setback for Anil Agarwal's $19 billion semiconductor chip project.
Not true in the criteria of the government
People familiar with the matter said the government will inform Agarwal's venture Vedanta Resources Ltd and Taiwan's Hon Hai Precision Industry Co that it will not be given incentives to make the 28-nanometer chip. Has applied for the incentive on behalf of the joint venture of both the companies, but is not able to meet the criteria set by the government. While Vedanta and Hon Hai can apply again. If rejected again, Agarwal may have to wait a little longer to fulfill his dream of setting up India's first major chipmaking operation. Let us tell you that Vedanta Group's metal and mining company has huge debt and both are trying to reduce it.
Could not find partner
If experts are to be believed, Agarwal had announced a chip partnership to make India's "own Silicon Valley". But even after 9 months, neither a tech partner nor licensed manufacturing-grade technology could be found for 28 nm chips. Either one of the two is very much needed for the venture to get government assistance.
Vedanta and Hon Hai do not have expertise
Vedanta and Hone, one of the world's largest assemblers of iPhones, have no experience in chipmaking. Their difficulty finding production-ready technology is evidence of how difficult it is to set up new semiconductor plants, large complexes that cost billions to build and require specialized expertise to operate. According to the representative of Vedanta, the company is waiting for the result of its application from the government. There has been no official statement from Hon Hai, better known as Foxconn.
Government PLI Scheme
Prime Minister Narendra Modi has promised $10 billion to woo chipmakers in India. Also promised that his government will bear half the cost of setting up all the semiconductor sites. Vedanta had earlier said that its partner Hon Hai had acquired "production-grade, high-volume" 40nm technology and "development-grade" technology for the 28nm chips. According to experts, this is not enough to get funds from the government. Anyway, Venture had applied to produce the 28nm chip.
Can apply again
The government may soon ask Vedanta to submit a new application for making 40 nm chips and give a revised capex estimate. Such a bid could be considered after the government reopens the application process for incentives, part of a bid to woo potential chip makers to the country, which has not materialized as of now. There is no response from the Ministry of Technology of India. Vedanta had earlier put forward $10 billion capex to the Government of India. Aggarwal is in great need of financial help from the government. Vedanta is working to reduce its gross debt of $6.8 billion by April.
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