According to a report by Reuters, Taiwanese electronics giant Foxconn is pulling out of a joint venture with Indian conglomerate Vedanta Ltd that was set up to produce semiconductors in India’s Gujarat.
Vedanta Chairman Anil Agarwal had announced a joint venture with Foxconn to establish a semiconductor and display manufacturing unit in Gujarat, India, with an investment of INR 1.54 lakh crore, in an attempt to tap into to tap into the country’s plans to become an electronics major.
Foxconn in a statement earlier said that it is pulling from the deal, allowing Vedanta to take over the entity in its entirety. “Foxconn is working to remove the Foxconn name from what now is a fully-owned entity of Vedanta,” the electronics manufacturer said.
Vedanta was facing challenges in securing financial backing for the project. Vedanta Chairman Anil Agarwal’s representatives had met with potential financiers from the Middle East, Singapore, and the US but were unsuccessful in securing a deal. The conglomerate had previously discussed raising a debt of $2.5 billion to $3 billion from Indian banks for the manufacturing units. It is speculated that Vedanta’s inability to secure domestic funding led them to seek external investment.
Several factors contributed to the project’s difficulties, including Foxconn’s lack of technical expertise, unfulfilled promises by Foxconn, concerns about Foxconn’s ties to China, and a lack of clarity on how Vedanta and Foxconn would obtain the required technical capabilities.
The partnership agreement stated that Vedanta would hold 60% equity while Foxconn would hold 40%. While the Indian government has partnered with organizations like IMEC for technological support, the technology obtained may still require several more years of development.
The situation presented an uncertain future for the Vedanta-Foxconn venture and now the complete project has fallen through.
Foxconn’s track record of announcing projects that are either incomplete or undisclosed had raised doubts as well.