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Vedanta Ltd. seeks free land, cheap water, and electricity to install the 1st semiconductor manufacturing plant in the country

Vedanta ltd. is seeking from Indian states free land, cheap water, and power under the Semicon India program to become 1st semiconductor manufacturing company in the conductor.

Ahead of the 1st ever Semi-con India 2022 conference in Bengaluru, Vedanta ltd. is seeking up to 1,000 acres (405 hectares) of free land from states, subsidised water, and electricity as incentives for its $20 billion foray into semiconductor and display manufacturing, under Semicon India Program.

Under the Semicon India program, the union government on 15 December 2021 authorised a package worth US$ 10 billion (Rs 76,000 crore) to revamp the semiconductor ecosystem. The package will support a wide spectrum of operations including design, Assembly, Testing, Marking, and Packaging (ATMP) facilities, greenfield chip and display fab units, and compound semiconductor units. Entities eligible for the package will be given support to the tune of 50% of the total project cost for the production of display fab units and semiconductors.

According to statements made by the conglomerate in February 2022, Vedanta ltd. has earmarked 15$ billion for its foray into the electronic chip manufacturing and display manufacturing space and plans to scale up the investment to as much as 20$ billion. 

Vedanta has signed a memorandum of understanding with electronics manufacturing services giant Foxconn to form a joint venture company that will manufacture semiconductors in India. The joint venture, first to be announced after the Centre laid out its semiconductor policy, will have Vedanta’s chief Anil Agarwal as chairman.

The company is targeting smartphones and electronics with the 28-nanometre (nm) fab and is looking at 70-80% domestic market sales, while the rest will be exported.

Vedanta Group has set up multiple teams to scout for suitable locations across five states to set up its semiconductor plant. Besides Telangana, the company is also surveying sites in Tamil Nadu, Maharashtra, Gujarat, and Himachal Pradesh.

Though Vedanta group is seeking federal incentives under the Semicon India program offering fiscal support, it is separately asking states for 1,000 acres of land free of cost on a lease for 99 years. It needs 700 acres for its facility and the remainder for ancillaries.

Vedanta has told state governments that its operations would help them generate $2.2 billion in tax revenues over 20 years and create up to 100,000 direct and indirect jobs.

Most of the world’s chip output is limited to a few countries like Taiwan and the United States. India, albeit a late entrant, is now actively luring companies. From $15 billion in 2020, the Indian semiconductor market is estimated to reach $63 billion by 2026, the government says.

As part of lobbying the states, Vedanta is demanding water and power at concessionary and fixed prices for 20 years, the sources said.

The first source added that Vedanta expects its plants to eventually consume about 40 million litres of water daily. That would be roughly the amount of water required for a city with more than 300,000 people, going by the suggested benchmark for urban water supply by the Indian government.

Singapore’s IGSS Ventures and ISMC, a joint venture between Abu Dhabi-based Next Orbit Ventures and Israel’s Tower Semiconductor, have also sought federal incentives under Modi’s program.

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