A $10 billion initiative to produce semiconductors in India is in jeopardy. Its failure will highlight a significant weakness in Prime Minister Narendra Modi’s drive for greater economic independence.

Influential detractors are already speculating about the veracity of the much-heralded achievement of becoming a center for smartphone production. Low-end assembly-line jobs would only make sense if they were a direct route to more complex manufacture, like that of microprocessors, and were developed with the aid of costly state subsidies and protectionist import levies.

In light of this, it is not a positive sign if the government decides against providing incentives for the 28-nanometer chip facility planned by Foxconn and Vedanta Resources Ltd., two companies owned by Indian billionaire Anil Agarwal.

According to persons familiar with the situation, Bloomberg News reported this week that neither of the two collaborators has considerable experience creating chips, and the initiative has not yet secured a technological partner or a license for manufacturing-grade technology. In exchange for meeting at least one of these two requirements, New Delhi has agreed to cover half of the cost of establishing semiconductor facilities.

Not just the Vedanta-Foxconn deal has encountered difficulties. In addition, a $3 billion proposal that included the Israeli foundry Tower Semiconductor Ltd. as a technology partner has come to a standstill. A third proposal is also in limbo since Singapore-based IGSS Ventures Pte. Ltd. wants to resubmit its incentive application, according to Reuters this week. With that, state-assisted chipmaking could need to start over.

Perhaps Vedanta will submit a new application when the junk-rated miner decides what to do with its record-breaking $2 billion in debts that are due next year. It’s possible that Tower is delaying its entry back into the contest until Intel Corp. has completed its acquisition of it. There might also be more recent claimants. According to Chairman Natarajan Chandrasekaran’s interview with Nikkei Asia in December, the Mumbai-based conglomerate Tata Group, which may soon become the fourth contract manufacturer of iPhones, also has plans to start building chips.

Even before the epidemic, New Delhi authorities saw the widening gap between Beijing and Washington as a once-in-a-generation opportunity. The COVID-19 interruptions, however, were what finally persuaded widget makers of the benefits of a “China+1” strategy. But the Modi administration chose to copy the jingoistic approach to trade taken by the Trump administration rather than concentrate on increasing the productivity of a workforce of more than 400 million people. It announced a “calibrated departure” from a two-decade-old strategy of lessening protectionism in 2018 and increased import taxes on smartphones from 15% to 20%. A net positive balance of payments was added to the 2019 electronics policy’s list of objectives.

Then, as the nation was preparing to emerge from its epidemic lockdown, Modi coined the phrase “self-reliance.” Production-Linked Incentives, or PLIs, a five-year, $24 billion subsidy, were conceived. The plan was to pick a small group of financiers and persuade them to encourage local production in a variety of sectors, including electronics, electric-vehicle batteries, solar panels, and textiles. Handouts and import protection were to be used to make up for the economy’s fundamental lack of competitiveness in order to reward risk-takers. One-fourth of India’s tariff lines would be greater than 15% by 2020. That is a double increase from ten years ago.

For mobile phones, the “Make in India” campaign seems to have been successful. Five years ago, the most populated country was a net importer of $3.3 billion; today, it is a net exporter. It now makes $9.8 billion more from selling phones to the rest of the globe than it does from paying China to provide it with them.